Employee Share Scheme latest: Bonus Rate Adjustments and Key HMRC Insights

Changes to Save As You Earn (SAYE) Share Option Schemes

Following the recent reduction in the Bank of England’s bank rate, the Government has updated the Save As You Earn (SAYE) Share Option Schemes bonus rates.

The 3-year bonus rate remains unchanged but the others have been updated as follows:

SAYE Bonus Adjustments

• 3-Year Bonus Rate: The rate remains unchanged at 1.1%.
• 5-Year Bonus Rate: The rate has decreased from 3.2% to 3.0%.
• Early Leaver Rate: The rate has decreased from 1.42% to 1.33%.

*Early leaver rate for participants that leave early and withdraw their savings with a bonus uplift.

Effective Date and Impact

Importantly existing SAYE schemes are unaffected by this change.

Only new SAYE contracts starting on or after 16^th August 2024 will be impacted by these rate changes.

For further details, visit the official government page.

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HMRC publishes latest share schemes statistics

In other, but related news, HMRC has carried out some research and the published report looks at four types of tax-advantaged share schemes:

All employee schemes

• Save As You Earn (SAYE)
• Share Incentive Plans (SIP)

Discretionary schemes

• Company Share Options Plans (CSOP)
• Enterprise Management Incentives (EMI),

All these schemes encourage employee participation and ownership while offering potential tax savings for both the employee and employer.

The key findings were:

• The total number of companies operating one more of the above schemes in the tax year ending 2023 increased by 7% to 19,990.
• Of the nearly 20,000 companies, 89% operated an EMI.
• 99% of these companies only operated one scheme.
• The total income tax relief was an estimated £660m and £420m NICs relief in the tax year ending 2023. Significantly this is a decrease of 23% on the previous tax year.
• As in previous years, EMI remained the largest contributor to the total cost of tax relief at £500m. However, SAYE has the largest aggregate value of options granted (at nearly £2bn) due to the fact it is an all employee scheme as opposed to EMI which is a discretionary

By contrast total relief for CSOP options remains much lower than other schemes at £30m.

Reda more about the report on the HMRC website here.

With the upcoming Budget on the 30^th October, some of the tax advantages of these schemes may be altered – we will provide an update on these after the announcement is made.

In the meantime for any queries or new enquiries about share schemes do not hesitate to contact us on the below details.

Read more about employee share schemes here.