The figures cover all four UK tax approved employee share schemes. These provide tax advantages to employers and employees. Two are available to all employees: Save As You Earn ("SAYE") and Share Incentive Plans ("SIPs"). Two are available only to certain employees where employers, meet the relevant criteria, and elect to offer them: Company Share Options Plans ("CSOP") and Enterprise Management Incentives ("EMI").
One headline from the statistics is the relative popularity of EMI schemes. Of the 19,990 firms operating employee share schemes in tax year 2023 (a 7% increase on the tax year that ended in 2022), the lion's share (89%) operate EMI. That points to the attractiveness of EMI tax benefits, as well as the significantly greater number of companies – to which the EMI regime applies.
That number is particularly striking when combined with the statistic that 99% of companies operating EMI did not operate any other tax advantaged employee share scheme.
For most firms, then, employee share schemes means EMI.
Another takeaway from the statistics is that, of the available schemes, EMI options drew the greatest tax relief by value in tax year 2023, despite the aggregate value of options granted under EMI being relatively small.
In tax year ending 2023, EMI options granted had a value of £620 million, with relievable gains – calculated as the total value of shares taken out of the plan – of £920 million.
The upshot is the average relievable gain per exercise event for EMI options can be far greater than any other share scheme, and in tax year 2023 it was. The average relievable gain for EMI options was £81,500. For SAYE it was £2,420, and for CSOP £9,490.
A similar story can be told in respect of the relief offered by EMI options in respect of income tax and National Insurance contributions ("NICs").
The total relief on CSOP options is lower than other schemes at £30 million. CSOP options also have a similarly small total value in tax year 2023: £280 million.
Looking ahead, it will be interesting to see in next year's statistics whether this year's General Election may have had an impact on the number of share options exercised, as well as the total quantum of gain relieved under the various employee share schemes in the tax year ended in 2024. Employees received an estimated £660 million in income tax relief and £420 million in NIC relief in tax year 2023. That's something to beat.
The previous Government published a call for evidence in 2023 to seek views on the usage and effectiveness of the SIP and SAYE schemes, including consideration of whether the schemes were attractive to lower income earners. There was no formal response published, and it remains to be seen whether the new Government will consider similar issues.
As to what may happen to share schemes under the new Labour Government generally, please see our article.
If you would like to discuss, please speak to speak to one of our share scheme specialists or your usual DWF contact.
