HM Revenue & Customs has recently published statistics on UK tax-advantaged employee share schemes, namely company share option plans (CSOPs), share incentive plans (SIPs), SAYE option schemes (SAYE) and enterprise management incentives (EMI) during the 2015-16 tax year. In the past, this information has been provided annually, but technical difficulties prevented the relevant figures from being published for the 2014-15 tax year.
The overall trend seems to be that fewer companies have been operating share schemes than in 2013-14, but that more employees have been participating and greater gains have been realised. However, within this, there are separate trends for each type of share scheme, with CSOPs and SAYE, in particular, gaining in popularity. These trends will no doubt be closely analysed by the Government as the tax reliefs are significant and, with continuing pressures on spending, ministers will wish to ensure that employee share schemes represent good value for money.
The main conclusions from the published figures are as follows:
- Around 10,720 companies operated tax-advantaged share schemes in the UK in 2015-16. This represents a small reduction since the peak in 2013-14, although the number of companies in which employees exercised EMI options has increased since 2013-14, as did the total gain realised by those employees.
- The number of companies operating SIPs has fallen slightly. Fewer free shares were offered to employees, but partnership shares and/or matching shares became more popular.
- The number of companies operating CSOPs has increased slightly, while the number of employees granted CSOP options has increased substantially from 25,000 to 40,000.
- There has been a significant increase in the number of companies operating SAYE from 440 to 520. Unfortunately, the technical problems experienced by HMRC mean that no analysis of participation levels or the total gains realised by employees has been possible.
- The value of shares subject to EMI and CSOP options (calculated at the date of grant) increased by 23% and 20% respectively between 2013-14 and 2015-16, whereas the value of shares subject to SIPs fell by 6%.
- The value of tax relief on gains arising from EMI and CSOP options exercised increased by 23% between 2013-14 and 2015-16. Most of this increase is attributable to the large increase in EMI gains in 2015-16.
- The estimated annual cost of providing relief from income tax and National Insurance contributions for SIP, CSOP and EMI is around £520 million, which is about 30% down on the 2013-14 figures. HMRC attributes this largely to changes in SIP arrangements and the large number of free shares issued in 2013-14.
- The value of gains on exercised EMI options has increased by 85% since 2013-14. This is partially explained by the increase in the number of companies where employees exercised options in 2015-16.