Out-Law News | 02 Mar 2018 | 4:07 pm | 1 min. read
Mel Stride, financial secretary to the Treasury, has also confirmed that the introduction of the planned change will be postponed from 6 April 2018 to 1 September 2018, to "allow for software changes and testing".
The announcement was welcomed by industry body ProShare in an email to its members. ProShare had been concerned about the lack of further details from the government since it announced the policy change as part of the Budget in November.
Share plans and employee incentives expert Suzannah Crookes of Pinsent Masons, the law firm behind Out-Law.com, said that the extension of the contribution holiday to all SAYE participants would be "widely welcomed", given changing working patterns.
"Increasing flexibility within tax-advantages employee share plans will help companies to offer arrangements which are relevant to an employee population with more varied working patterns," she said.
"The delayed implementation shows that practical concerns have been taken into account, and the fact that the benefit is now being extended to all SAYE plans, there will be little detriment to participants," she said.
SAYE, also known as Sharesave, is a type of 'all employee' tax-advantaged share scheme which allows employees to build up, and ultimately benefit from, a financial stake in their employing company. Employees who join a SAYE scheme have money deducted from their pay after income tax and National Insurance each month other the life of the scheme, which is usually three or five years. This money is then used to buy shares in the company at a discounted price.
The current rules allow those participating in a SAYE scheme to suspend contributions for six months without having to give up participation in the scheme. The break was designed to benefit employees, such as those on maternity or parental leave, who were temporarily unable to afford to contribute to the scheme. ProShare has been lobbying the government for a change in the rules in order to benefit those who choose to take longer than six months' leave, or who are on leave for other reasons.
In an email to members, ProShare described the latest announcement as "a victory for common sense and pragmatism". The announcement means that anyone who joins a SAYE scheme this spring or summer will be able to benefit from 1 September, and that plan administrators will have sufficient time to implement the changes, it said.
HM Revenue and Customs (HMRC) will publish technical notes to support the change before it comes into force, according to the government.