Despite a number of other changes made to share plans as part of the review, no indication was given that limits were to change. So, it was a big surprise when the Chancellor announced an increase for both SAYE and SIP plans in the 2013 Autumn Statement.
Was it just coincidence that the changes came after the share price premium at flotation meant Royal Mail employees’ Free Share allocation exceeded the maximum allowed in the tax year?
In summary, the changes which take effect from April 2014 are:
- The maximum monthly amount that can be saved will double from £250 to £500
- The amount of Free Shares which an employee can receive in a tax year is rising from £3,000 to £3,600
- The amount of savings an employee can make for Partnership shares each year increases from £1,500 to £1,800 (or to £150 a month)
- The amount of Matching shares is linked to the amount of Partnership shares (max 2:1) so will go from £3,000 to £3,600.
We have surveyed clients on the impact of these changes and detailed survey results are available va this link.
Phil Ainsley, Managing Director, Employee Services is upbeat about the changes and said it was a positive step which would encourage wider share ownership in the workplace. Summarising the SAYE and SIP survey results received from clients, he said: “They showed that most companies are likely to increase the monthly savings limits for their plans, although the benefit will be greatest for those participants already saving at the limits. It was also recognised that there are additional employer NI savings with SIP plans and those companies without plans are reviewing their stance.” However, there remain concerns around headroom for granting Sharesave options and sourcing shares. There is a need to check whether scheme rules need updating and whether any changes are needed by payroll to manage the new limits.
If you would like more information on this topic, please contact your relationship manager.