- Participants exercising options in 2017-18 gained an average of £2,917
- Equiniti data shows five-year Sharesave schemes maturing in 2018 returned average 70% gains to employees
- £170m worth of tax savings show extended benefits of share plans
- Equiniti urges employees to check if their company offers a scheme and to get involved
Analysis of HMRC data1 by Equiniti, the UK’s leading provider of employer share plans, found that 120,000 participants exercised their company’s Sharesave options through 2017-18, gaining an average of £2,917.
It marks a small increase from the gains made on realised options in the previous year when employees would have seen an average return of £2,571 – still significant in the current low-interest rate environment.
Sharesave (or SAYE) schemes allow employees to save money direct from pay, with an opportunity to invest this in the company they work for, by buying shares at a discounted price offered at the start of the period. If the share price rises in value over the savings period (typically three or five years) they can sell the shares to profit from the gain. Sharesave is a low-risk way to save and invest, if the share price declines in value over the period, savings can be returned in full.
As a UK tax advantaged scheme, HMRC estimates that Income Tax and NIC relief saved by employees was £170m, an average saving per employee of £1,417, further demonstrating the attractiveness of these tax-efficient share plans.
Graham Bull, Managing Director of All-Employee Share Plans at Equiniti, commented:
“Employee share schemes are a fantastic way for companies to attract, retain and motivate talent. In order for them to be an effective tool it is vital that they are able to fulfil their role as a low-risk, tax efficient savings vehicle that can offer outsized returns – the HMRC figures are a clear vindication of this.
“These figures do not show how much employees have saved nor over what period. However, Equiniti’s figures reveal that in 2013 average saving in new five-year schemes was £82 per month, meaning participants could have saved £4,920, so the average gain of £2,917 would represent nearly 60% return on investment.
“The strong annual performance of share plans is no surprise – Equiniti’s own research into the returns of the Sharesave schemes it administers found that five-year schemes maturing in 2018 gave employees an average return of 70% on their savings.”
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Notes to Editor:
Equiniti Group plc, an international technology-led services and payments specialist, provides non-discretionary payment and administration services to some of the world’s best-known brands and UK’s largest public-sector organisations.
It is the UK’s leading provider of share registration, employee share plans, and associated investor services, and also has market leading positions in pension administration and software, and employee benefit schemes.
Equiniti’s services, which are delivered by over 5,000 employees, benefit 36 million people in the UK, US and 120 other countries around the world.