From 6 April 2014, the investment limits for sharesave schemes doubled from £250 to £500 a month. The maximum value of shares an employee can acquire with tax advantages through Sips has risen by £300 a year to £1,800 for partnership shares and to £3,600 a year for free shares.
Equiniti surveyed forty leading UK employers who provide a sharesave plan. The majority (26) of those who provide a share incentive plan (Sip),found that 33% do not need to change their scheme rules to take account of the new limits.
Of those respondents that provide sharesave schemes:
- 89% currently allow the maximum £250 monthly savings limit.
- 81% do not think the new limit will have an impact on how shares are sourced at maturity, while 19% believe it will.
- 78% do not intend to change the launch date of their sharesave scheme as a result of the increase in limit. 22% do.
- 33% do not need to change their scheme rules to take account of the limit change, while 17% do and 50% will need to check.
Among respondents that provide Sips:
- 88% intend to increase the savings limits that employees can make for partnership shares.
- 73% said the increase will not change the matching ratio, while 27% said it will.
- 60% said the new limits will not change how or when they award free shares, while 40% said it will.
- 26% do not need to change their Sip rules to take account of the limit change, while 16% said they will and 58% will need to check.
Phil Ainsley, head of employee share plan at Equiniti, said: “The survey demonstrates how the majority of organisations are likely to increase their monthly savings limits. This will herald not only an interest in take up, but also more investment and a higher number of shares under option. Employers think the benefit will be greatest for those already saving at the limit, but we are seeing concerns around costs, headroom and sourcing new shares, which means some restrictions put in place. There is still some work to do to check whether scheme rules need updating and whether payroll departments will need to make changes.”