Tax-advantaged share schemes

HMRC has published a report on research it commissioned to better understand the motivations for, and barriers to, employers and employees participating in tax-advantaged share schemes (TASS).

Key findings from the research include:

• employers report that TASS have a positive impact on employee engagement and are important tools for recruitment and retention of key staff;
• employees who participate in TASS often feel more ‘invested’ in the success of the company;
• employees in more junior roles tend to have less understanding of shares and the tax incentives;
• Save As You Earn schemes are considered easy for employers to operate and for employees to understand, with limited risk and affordable monthly contributions, although the three-year minimum contract period is a potential disincentive;
• share incentive plans provide an effective way to engage staff in senior roles, although the structure of SIPs can be difficult for employees to understand; and
• company share option plans and enterprise management incentives are helpful to retain key staff, but they can be difficult to understand for both employers and employees.