Equiniti Employee Share Plans Discussion Forum
On 3rd July, Phil Ainsley Managing Director, Employee Services, hosted a forum to discuss ‘What you need to know about major changes to UK tax advantaged share plans and the move to online filing for all share plans’.
Discussions were led by Matthew Ward and John Franklin, New Bridge Street, Consulting.
19 attendees, representing 14 companies attended the event and discussed the new HMRC self-certification and reporting requirements and the many changes that have impacted share plans over the past year. Guidance was provided by Matthew and John about how to update plan rules in preparation for self-certification.
Key messages from the discussion included: companies were amending their plan rules to incorporate changes (even if they were automatically ‘written-in’) to avoid confusion or errors and to obtain tax relief; by updating rules it will be easier when you come to self-certifying your plan; get your registration right (name and scheme type cannot be corrected – only solution is to cease scheme and re-register) and wherever possible a company’s non-tax advantaged plans should be registered under one plan name. Matthew confirmed that if a company has an ‘umbrella’ plan which has tax advantaged and non-tax advantaged elements, the tax advantaged element needs to be registered separately.
His advice regarding what plan name to register is, ‘Keep the name simple, general and above all avoid typing errors as it cannot be changed.’
Phil Ainsley, summarising the importance of this topic commented: “To avoid fines and to ensure plans remain tax advantaged, all companies should have an agreed plan of action and timetable to ensure they complete self-certification in time. Although the deadline is July 2015, we would like to see this process completed well before April 2015 in line with preparations for the completion of next year’s tax returns.”
SAYE bonus rate set to rise
HMRC has announced that a new SAYE prospectus will come into force on 28 July 2014,with a bonus being applied to five year savings contracts for the first time since 2011.
Phil Ainsley, Managing Director, Employee Services says, “The SAYE bonus rates are automatically adjusted by linking them to average three and five year swap rates. Recent market discussions and speculation about when interest rates will go up is reflected in current rising swap rates, triggering a rise in the SAYE bonus rate. I see this as positive news for companies offering Sharesave as an attractive employee benefit that will increase participation and generate higher levels of engagement.”
SAYE invitation documentation for launches from 28 July 2014, where five year savings contracts are offered, will need to be updated with this change. The new prospectus must be used from this date.
Finance Bill 2014-2015
In previous years, the Finance Bill has usually been enacted in July. The current Bill has completed its committee stages at the House of Commons and the House of Lords and is on track for enactment this month. This will bring in some important employee share plan changes which include: updating ITEPA 2003 with the new SIP limits and enabling these to be changed by Treasury Order; replacing the word ‘Approved’ with other terminology (see table); enabling online certification, annual returns and penalties; giving powers to HMRC to examine companies’ plans.
Previous terminology New terminology
Approved schemes Tax advantaged schemes
Unapproved schemes Non-tax advantaged schemes
An approved SIP A Schedule 2 SIP
An approved SAYE option scheme A Schedule 3 SAYE option scheme
An approved CSOP A Schedule 4 CSOP
Withdrawal of approval Ceasing to be a Schedule ... scheme
Key findings for the 2012/2013 tax year include: the number of share and options awards increased to £2.85bn; the cost of Income Tax/NIC relief was 45% higher than the previous year (showing greater gains being made by employees); the increase in gains is due to share prices picking up; and the number of employees exercising options in 2012/13 has risen by 23% since 2011/12 and by 61% since 2010/11.
Jennifer Rudman, Strategic Development Manager, All Employee Plans, comments: “The HMRC Employee Share Schemes Statistics report covering 2012-2013 tax year data, shows a positive trend in SIP and SAYE, with employees seeing increasing benefits from their companies’ all employee share plans. Results from the 2013 ifsProShare annual survey have now been released and these positive trends are reflected in that report too.”
ESP Portal and PDMR developments
In our last edition of the Ezine, Sarah Moore provided an update on ESP Portal and its extension to cover international employees. Development roll-out has meant that the first phase has been completed and both easyJet and Pearson have gone ‘live’ with their branded international ESP Portal services. easyJet used the ESP Portal to invite both international and UK employees to join their SAYE scheme and over 2,000 employees used the service to submit their application.
Other developments underway include enhancing PDMR and Closed Period functionality. The aim is to improve recording, validation and reporting processes so that they are managed effectively and consistently across both SIP and SAYE products. The first changes were seen at the beginning of July with updates to the way PDMRs are recorded and additions to SAYE allotment reporting.
Neil Burgess, Project Manager, Solutions & Projects explains that there are other changes in progress: “These include ‘dynamic’ messaging in ESP Portal, additional IVR prompts, further SIPPDMR reporting and recording of Closed Periods.”
Further development and roll-out for both international ESP Portal and PDMR services will continue throughout the year.
Service excellence is important to us all at Equiniti and in order to measure this Employee Services send a ‘60 second survey’ twice per year to our clients.
On a scale of 1-5 we ask clients to rate us on a number of topics, ranging from account management to delivery of specific events to the quality of service we deliver through our contact centre.
Our latest results show that Service Delivery Managers scored an average of 4.54 for our Account Management and 94% of clients would recommend us. Our overall service scored a highly credible 4.34.
Phil Ainsley, Managing Director, Employee Services reaffirmed that continuous improvement is key to how we run our business at Equiniti: “Client satisfaction is dependent upon our service delivery and it is a great result to see every score has increased over the last 18 months. Our continued investment in people and systems will keep us at the forefront as our clients’ requirements continue to evolve.”
If you would like more information please contact your relationship manager.
Ezine issue: July 2014