Autumn Statement 2014 Predictions: Any more changes for employee share plans?

Written on 27 Nov 2014

Speed read: 2014 has been a year of change for companies operating share plans. We do not expect further significant announcements on tax-advantaged plans in the Autumn Statement. The Chancellor may instead take the opportunity to comment on measures relevant to unapproved schemes and wider employee tax issues following recent consultations by the Office of Tax Simplification.

Companies operating employee share plans have seen many changes in 2014.

The process of obtaining HMRC approval of tax-advantaged plans has been swept away, replaced with a new online registration and self-certification regime. Unapproved arrangements must now be registered with HMRC. Annual returns must be filed online for the 2014-2015 tax year onwards. For further information click here.

We do not expect further significant announcements in relation to tax-advantaged share plans in the Autumn Statement, particularly in view of the forthcoming general election.

What is more likely is that the Chancellor may take the opportunity to comment on measures relevant to unapproved schemes and wider employee tax issues. HMRC and the Office of Tax Simplification (“OTS”) have been conducting a number of reviews in this area and the government may respond to some of their recommendations.

It may publish an update on the OTS’ proposal to introduce a new concept of “marketable security”. This is intended to remove the dry tax charge which can currently arise when employees and directors acquire shares, so that the individuals would be able to choose whether the tax charge arises at the time the shares are acquired or, if different, at the time at which they can be sold for cash (when they become ‘marketable’).

Further detail may be provided on the proposed new employee shareholding vehicle (and associated tax exemptions and safeguards against avoidance). There may also be measures to simplify employee benefits in kind and expenses, such as the abolition of the £8,500 higher paid threshold for benefits in kind which we expect to be included in Finance Bill 2015.

Finally, although the Chancellor may comment on employee shareholder status (whereby employees give up certain employment rights in exchange for shares in their employer), we do not expect that any substantive changes will be announced prior to the general election.