Share scheme limit rise divides opinion

By Jennifer Paterson 6th January 2014 12:00 am 6th April 2017 3:37 pm

Chancellor George Osborne’s Autumn Statement, presented on 5 December, contained the announcement that the government will increase the investment limits on share schemes from April 2014.

The limits on sharesave schemes will double from £250 to £500 a month, while the maximum value of shares an employee can acquire with tax advantages through share incentive plans (Sips) will increase by £300 a year, to £1,800 for partnership shares and £3,600 for free shares.

Phil Hall, specialist adviser at IFS Proshare, who has campaigned for an increase in share scheme limits since 2008, said: “Every year since then, we have either put a submission in to the Treasury, campaigned in the press, or met Treasury officials on a number of occasions. It has really only been in the last few months that we’ve received a positive response.”

Malcolm Hurlston, chairman of the Employee Share Ownership (Esop) Centre, added: “This is a long-awaited bonanza for the mass of employee owners who have been neglected for the last few years.

“It has been around 20 years since the sharesave limit was increased. Many employees have been bumping against the ceiling for some time. The doubling is a very sensible move.”

But although the industry has welcomed the move, some have expressed disappointment that the increase has not been future-proofed to take account of inflation.

Hall added: “There is nothing saying that, in future years, we won’t be back to a similar position, where we’ve had, effectively, a year-on-year decrease because there is no increase in the limits.

“That is something we will continue to push for. We’re very pleased with the outcome and that the Treasury has finally listened and made this overdue change. It’s going to benefit employees and employers. But if there was one remaining ask, it would be that there are increases every year in line with inflation.”

The industry would also like to see the government introduce an incentive around company share option plans (Csops) to encourage take-up. Hurlston added: “At some point, the government is going to see that, if it is really going to reach the low-paid and part-timers, only the promotion of Csops is going to achieve that.”

Employers’ provision of share schemes was celebrated in November, with awards handed out by the Esop Centre and IFS Proshare. Winners of IFS Proshare Awards included BT Group, Burberry and Rio Tinto, while the Esop Centre presented accolades to Edwards Group, IGas Energy and Pearson.

The benefits of taking part in well-performing share schemes can be significant for employees, as was illustrated by several sharesave scheme maturities at the end of last year. More than 14,000 B&Q and Screwfix employees shared a £15 million payout following the maturity of parent company Kingfisher Group’s three-year and five-year sharesave schemes, while Travis Perkins’ five-year sharesave scheme, which matured in December, saw nearly £17 million shared between 7,000 employees.

How share scheme limits will change from April 2014

Sharesave limits will double from £250 to £500 a month.
The maximum value of shares that an employee can acquire with tax advantages through share incentive plans (Sips) will rise by £300 a year, to £1,800 for partnership shares and £3,600 for free shares.

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