Employment related securities changes — consequential to the Neonatal Care (Leave and Pay) Act
Published 30 October 2024
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This publication is available at https://www.gov.uk/government/publications/share-incentive-plan-consequential-change-because-of-the-neonatal-care-leave-and-pay-act-2023/f429f31d-3d2e-45ad-9e99-ab4538c2dbf2
Who is likely to be affected
Employers and employees who use Share Incentive Plans (SIPs).
General description of the measure
This measure will ensure that the notice an employer must give to an employee regarding the possible effect of deductions from salary, in relation to a Share Incentive Plan (SIP), will refer to S2i’d and ready to publish Statutory Neonatal Care Pay.
Policy objective
The objective of this measure is to ensure that Statutory Neonatal Care Pay is treated the same way as other Statutory payments with regards to the notice an employer must give to an employee regarding the possible effect of deductions from salary, in relation to a SIP.
Background to the measure
The Neonatal Care (Leave and Pay) Act 2023 introduced provisions to enable parents whose babies require specialist care after birth to take additional paid time off work.
SIP is a tax advantaged share scheme introduced in 2000. A SIP is a non-discretionary scheme, meaning a company that sets up a SIP must allow all their eligible employees to participate. Under a SIP, a company can enable employees to purchase ‘partnership shares’ or can award free shares. An employee may authorise the employer to deduct from salary (up to £1,800 in a tax year or 10% of salary if less) to acquire ‘partnership shares’. The SIP legislation requires an employer, when entering a partnership share agreement, to provide a notice to inform an employee of the possible effect of deductions from salary, on entitlement to social security benefits, Statutory Sick Pay and Statutory Maternity Pay.
This measure makes a consequential amendment to the SIP legislation, as a result of the Neonatal Care (Leave and Pay) Act 2023, by including a reference to Statutory Neonatal Care Pay in the list of statutory payments.
Detailed proposal
Operative date
The measure will have effect on and after the date of Royal Assent to Finance Bill 2024-25.
Current law
Current law is contained in Schedule 2 paragraph 48 Income Tax (Earnings and Pensions) Act 2003 (ITEPA).
Proposed revisions
Legislation will be introduced in Finance Bill 2024-25 to make a consequential amendment to Schedule 2 paragraph 48(2) ITEPA 2003 and the ‘Employee Share Ownership Plans (Partnership Shares — Notice of Effects on Benefits, Statutory Sick Pay and Statutory Maternity Pay) Regulations 2000’. This measure will ensure that the notice an employer must provide to an employee regarding the possible effect of deductions from salary on entitlement to social security benefits and statutory payments will also refer to Statutory Neonatal Care Pay. This measure will ensure that this notification works as intended.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households, and families
There is no anticipated impact on employees who use SIP plans as this measure only changes the content of the notice that an employer must provide to an employee when entering a partnership share agreement under a SIP.
The measure is not expected to impact on family formation, stability, or breakdown.
Equalities impacts
It is not anticipated that any of the proposed changes will impact on any individuals with protected characteristics.
Impact on business including civil society organisations
This measure will have a negligible impact on an estimated 850 companies that are running SIP schemes by slightly changing the notification they are required to share with their employees when entering partnership share agreements. One-off costs could include a business having to spend time to make themselves aware of the change and updating their notification template. There are no continuing costs.
This measure is not expected to impact civil society organisations.
This measure is expected overall to have no impact on businesses and individual’s experience of dealing with HMRC as the measure does not change any processes that interact with HMRC.
Operational impact (£ million) (HMRC or other)
There will be no significant operational impact.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through regular communication with affected taxpayer groups.
Further advice
If you have any questions about this change, contact the Share Schemes Policy team by email: policyemploymentbenefitsexpenses@hmrc.gov.uk.