Read the highlights of how Yorkshire Building Society Group has performed or download the reports to study our finances in more detail.
3rd March 2021
We’re delighted on behalf of the hundreds of thousands of working people in Britain who currently participate in Sharesave (Save As You Earn) by the Chancellor’s commitment to maintain the Annual Exempt Amount (“AEA”) in Capital Gains Tax (“CGT”) at its current level until April 2026.
Our data showed that 98% of workers who use Sharesave products currently do not exceed their annual allowance. We believe the lowering of the threshold proposed by the Office of Tax Simplification (“OTS”) would have delivered only a minor uplift in revenue for HM Treasury but could have resulted in many lower-income employees having to complete a tax return for the first time. This added complexity could have had the unintended consequence of disincentivising employees from becoming members of their employer’s Sharesave plan.
An expected second paper from the OTS has yet to be published and whilst the Chancellor provided reassurance yesterday that there would be no rise in the rates of Income Tax, National Insurance or VAT there was no such mention for CGT. We will therefore be listening closely for any mention of CGT rates when the Chancellor makes his announcements on ‘Tax Day’ on 23rd March.
Finally, we are encouraged by the Chancellor’s announcement that as part of his commitment to making “the United Kingdom the best place in the world for high growth, innovative companies” he’s launching a consultation to make sure the Enterprise Management Incentive plan is internationally competitive. We look forward to engaging with industry stakeholders in response to this consultation.
OTS CGT - why you should care (part 1 of 2)
What is the OTS CGT report and why should I care?
“77% of employees say money worries have affected their job performance” That’s just one of the worrying stats in this report (and that was before the pandemic).
It’s not all doom and gloom though. The scale of the problem is clear but the good news is that organisations (including YBS) are proactively exploring and testing new potential solutions.
This latest report from NEST Insight brings to life the challenges and opportunities through verbatim feedback from employers. Well worth a read for anyone who cares about employee and colleague wellbeing, which we hope means YOU!
If you would like to know more please reach out to Peter Smith.
OTS CTG Review
We’ve provided the following statement by our very own Peter Smith to ESOP Centre for the next edition of newspad following a request to all the administrators for their views on the OTS report, ESOP Centre’s proposal to seek a carve out and a wider question about eligibility criteria.
“YBS Share Plans: We share the industry’s concerns about the OTS report recommendations. From a high-level assessment of our own data we believe that a large proportion of Sharesave participants do not currently exceed the annual allowance.
“Whilst a full carve out would be welcome, our main concern is preserving the annual allowance at something close to its current level. We believe that the proposed reduction in allowance is likely to deliver only a minor uplift in revenue for HM Treasury but could result in a lot of workers who are unfamiliar with the self-assessment process having to fill in tax returns and even deter some from participating in plans altogether.
“We’re keen to discuss this matter further and would support any proposals to protect hard-working employees, many of who are on lower incomes, or are key workers in retail outlets and factory floors. With the current economic downturn, uncertainty from the ongoing pandemic, and the end of the EU withdrawal agreement, we believe UK businesses need the engagement and motivation that comes from ESO more than ever.
“We fully support any efforts to update share plans to the modern workforce and move back towards the original principles that all employee means all workers.”
OTS CGT Review 2020 – the view from YBS Share Plans
If the OTS CGT review is something you struggle to get your head around, have a read of the below questions and answers authored by our very own Peter Smith to gain a better understanding.
What is it?
Published 11 Nov 2020, it provides recommendations in response to a request from the Chancellor. Full text can be found here: https://www.gov.uk/government/publications/ots-capital-gains-tax-review-simplifying-by-design
A 2nd report on the practicalities of implementation is due in Q1 2021 and changes could happen in the expected. March 2021 Budget.
Whilst these are only recommendations the Chancellor clearly needs to find additional revenue to fund the costs of the Covid19 crisis.
Why should I care?
5 of the 11 recommendations could impact employee share plans, specifically Sharesave (SAYE), EMI and Growth Shares.
In particular the OTS report presents Employee Share Plans as a means of reducing tax by reclassifying employment income as capital gains and proposes tackling this by:
1."more closely aligning Capital Gains Tax rates with Income Tax rates” [Recommendation 1]
2. reducing the annual tax-exempt allowance from £12.5k to somewhere between £2k and £4k. [Recommendation 5].
Whilst these recommendations wouldn’t remove the income tax relief from Tax-Advantaged [Approved] share plans they could significantly reduce the tax relief benefits in practical terms. This could leave more Sharesave participants facing a CGT bill, or at least the need to navigate the self-assessment process.
What is YBS Share Plans doing about it?
We’re working with industry partners such as ProShare, the ESOP Centre, advisors and other providers to support a response to the Treasury reflecting the concerns of the whole industry about the potentially detrimental impact on hard working “ordinary” employees who may already have been placed under financial strain by the Covid19 pandemic and or Brexit related disruption.
How can I help?
We’re collating and analysing our data to illustrate the scale of the potential impact in terms of additional participants being subjected to the self-assessment regime and how much extra revenue this would really bring to the Treasury. What would be incredibly useful to us in addition to that would be to hear the views of plan issuers:
Employment Related Securities Bundle (35)
HMRC has released its latest Employment Related Securities Bulletin (35) which can be found here
It provides an update on the impact of coronavirus (COVID-19) on Enterprise Management Incentive (EMI), Save as you Earn (SAYE), Company Share Option Plans (CSOP), Share Incentive Plan (SIP), including changes to the SAYE prospectus, SAYE payments, and SIP deductions.
Furlough - Extending the payment holiday term
10th June 2020
We have a New Prospectus- Save As You Earn savings arrangements - New Prospectus and Certification from 10 June 2020
One key update is a new SAYE prospectus comes into force on 10th June which replaces the Prospectus from 1t September 2018. The new Prospectus allows for employees to delay payments more than 12 months if affected by Covid-19 situation.
“Where SAYE participants are unable to contribute because they’re furloughed or on unpaid leave during the coronavirus (COVID-19) pandemic, HMRC will extend the payment holiday terms. The current prospectus already allows employees to delay the payment of monthly contributions by up to 12 occasions in total, without causing the savings contract to be cancelled and we will allow contributions to be postponed for a longer period where the additional months are missed due to COVID-19. Paragraph 20 of the SAYE prospectus has been amended to reflect these changes” "We welcome this change as it aligns with our purpose to provide Real Help with Real Life, especially at this time” Says Michael Taylor, Senior Manager, Share Plans
NO EXTENSION - A reminder to file share plan returns by 6 July
The date for filing UK annual share plan returns for the 2019/20 tax year (which ended 5 April 2020) is fast approaching. The returns must be submitted to HMRC by Monday 6 July 2020.
Given the unprecedented levels of disruption to businesses caused by the Covid-19 pandemic, many advisors anticipated that HMRC might consider extending the deadline or relaxing the reporting requirements, but this has not happened yet. So, it must be taken then that 6th July is a definite date and since the reporting process is quite lengthy it may be prudent to stat preparations soon, says Andy Sumner – Legal and Technical Manager, Share Plans
Returns are required, even where there has been no activity (in which case a nil return should be filed).
Deadlines for registration of new schemes and filing of returns
HMRC recognises that some employers and agents may struggle to meet ERS tax obligations due to coronavirus.
You should try to meet your obligations such as registering new schemes and filing returns as soon as you can. However if you cannot and this is due to coronavirus, HMRC will consider coronavirus as a reasonable excuse for missing some tax obligations. You should explain how you were affected by coronavirus when you make your appeal.
Please refer to the latest guidance on disagreeing with a tax decision
The pandemic that we find ourselves living through has had some unintended consequences with many companies having to furlough employees. This has raised many questions linked to employee benefits in particular All Employee Share Plans, Sharesave and the Share Incentive Plan (SIP). To learn more on our views, that of your peers and specialist Share Plan Advisors please take a look the following webinars:
6 May 2020 - Tapestry Worldwide Webinar – Covid-19: Impact on UK Share Incentive Plans and Sharesave (SAYE)
Development Manager, Bryony Padgett-Jones joined the Tapestry Compliance Team to share her insight into how COVID-19 was effecting All Employee Share Plans from an administrators perspective specifically looking at, can you carry on with business as usual when so much around us is unknown. To learn more from this great informal insight a recording of the webinar can be found here.
4 June - ESOP Centre Virtual Sofa
The team covered trends and topics around share plans prevalent at this time covering employee engagement; furlough; what decisions companies were making around new invitations; the impact on share plans and questions around managing costs for companies through this pandemic.
You can watch a recording of this webinar on our website here.
How to provide effortless financial stability for your employees
13 August 2019
We’re committed to getting the UK saving again because we know the contribution financial wellbeing makes to our overall health, happiness, home life and work life. Sharesave (SAYE) and the Share Incentive Plan (SIP) can make a positive difference to all employees’ sense of financial wellbeing. To help you benchmark your share plan design and its potential impact, we are sharing some key insights from our own customer data and the most recently published ProShare annual share plan survey (published June 2019).*
Attitudes to employee share ownership
14 February 2018
Want to get the most out of your share plan? Latest research on Attitudes to Employee Share Ownership is essential reading before deciding how to proceed.
The findings provide valuable insight to encourage participation, boosting productivity by engaging employees of every demographic, and helping to future-proof all-employee share plans.
Elsewhere on our website
Find out how we manage multiple schemes for Kainos, who provide digital technology services and platforms for public and private sector organisations across the globe, employing over 1,300 people across Europe and the US.
Read "in their words" feedback quotes from our clients and scheme participants.
Learn about our culture, people, history and the importance of why we always put people first..