National statistics

Employee Share Schemes statistics: background

Updated 9 June 2023

1. Background information

1.1 Introduction

Share schemes allow employees to acquire options over shares or shares directly in their company as part of their remuneration. Under specified conditions, gains on shares acquired under tax-advantaged share schemes have advantages for employees and employers of being free from Income Tax (IT), National Insurance contributions (NICs) and for SIP, Capital Gains Tax (CGT). A company is “operating” a scheme if it has employees with live option(s) and-or shares and the scheme itself has not ceased or had its approval withdrawn.

Table 1: Information on the tax advantaged employee share schemes available.

Scheme Name	Introduced	Description	Type	Relief given
EMI	2000	Options awarded	Discretionary	IT / NICs
CSOP	1996	Options awarded	Discretionary	IT / NICs
SAYE	1980	Savings with option to buy shares	All employees	IT / NICs
SIP	2000	Shares awarded or purchased	All employees	IT / NICs / CGT

There are four types of tax-advantaged share schemes currently running. CSOP and EMI are called discretionary schemes, as they do not have to be offered to all employees. Both are share option schemes (i.e. the right to buy shares later at a previously determined price). SIP and SAYE are called all-employee schemes, as they have to be offered to all qualifying employees in a company without exception. Under the SIP scheme, employees are awarded and are able to buy shares, and under SAYE are awarded options to buy shares from a fund into which they save.

1.2 Company Share Option Plan Schemes

A type of discretionary scheme called Company Share Option Plan (CSOP) replaced the previous Discretionary Share Option Plan (DSOP) in 1996. Statistics for DSOP and CSOP are available in the CSOP statistical table. For CSOP, the value of the share options that may be held by an employee at any one time is limited to £30,000. This limit takes into account the value of shares in options held under any other tax-advantaged CSOP scheme. In addition, options may not be offered at a discount, i.e. the exercise price must not be manifestly less than the market value of the underlying shares on the option grant date.

No Income Tax or National Insurance is chargeable on the exercise of CSOP options if they are exercised three or more years after the date they were granted.

1.3 Enterprise Management Incentives

Introduced in Finance Act 2000, EMI offers tax-advantaged share options to help small, higher risk independent trading companies recruit and retain the high calibre people they need to grow and succeed. EMI is open to qualifying companies or groups with gross assets not exceeding £30m (increased from £15m on 1 January 2002).

One of the main features of EMI is that in a three year period, each employee can be granted options over shares worth up to:

• £250,000 for options granted on or after 16 June 2012,
• £120,000 for options granted on or after 6th April 2008,
• £100,000 for options granted before 6th April 2008

Furthermore, companies can have up to £3m of shares under EMI option at any one time. Nil cost and discounted options can be used (though there may be tax and National Insurance implications).

The individual limit of £250,000 includes the value of any Schedule 4 CSOP options granted by the employing company and any companies that are members of the same group of companies.

EMI is restricted to companies that have fewer than 250 full-time equivalent employees at the date on which a qualifying EMI option is granted. EMI options are discretionary. Qualifying companies can choose to grant EMI options to any number of employees working for them (at a parent, or a qualifying subsidiary) whom they employ for at least 25 hours per week or 75% of their working time and who have no material interest in the company. From March 2020 to April 2022 there was a time limited exception to working time requirements. This was to ensure that individuals who were furloughed or who had their working hours reduced below the statutory working time requirement for EMI as a result of COVID-19 retained access to the scheme’s tax advantages. It applied to both existing participants of EMI schemes and in circumstances where new EMI share options were granted.

No Income Tax or National Insurance contribution is chargeable on either the grant or exercise of EMI options if: the options are exercised within 10 years of grant; the exercise price is the market value of the shares at the date the option is granted; and the company and employee qualifies for EMI throughout the period from the grant to exercise. If the option is granted at a discount, the amount of the discount is normally taxed on exercise and National Insurance may be payable.

1.4 Save As You Earn Share Option schemes

Tax relief for approved SAYE Share Option schemes was introduced in 1980. The scheme allows a company to give employees the right (‘option’) to buy shares in the company at an exercise price that is fixed when the option is granted. The exercise price must not be less than 80 per cent of the value of the underlying shares at that time.

Participating employees can save up to £500 per month from 6th April 2014 under a SAYE savings contract with a bank, building society or relevant European institution. Previously they could save between £5 and £250 per month. These contracts last for three or five years. Previously, employees with five-year SAYE contracts could decide at the outset whether to take the proceeds after the fifth anniversary or leave the savings for another two years to earn an additional bonus, but the seven-year scheme was abolished in July 2013. The bonus or interest earned on these savings is tax-free.

The lump sum resulting from the SAYE contract can be used to buy the shares if the employee chooses to exercise their options after three or five years depending on the terms of the contract. Employees are not obliged to exercise their options and they may choose not to, particularly if the current share price is less than the exercise price set when the option was granted. If the option is not exercised, the employee receives the proceeds of the SAYE savings contract in the normal way.

Under an approved SAYE Share Option scheme, the employee does not pay Income Tax or National Insurance contributions on:

• the grant of options,

• the bonus or interest received under the SAYE contract,

• the benefit from being able to buy shares at a discounted price,

• any increase in the market value of underlying shares between the dates on which the option was granted and exercised

CGT may be payable if shares acquired through a SAYE scheme are later sold or disposed.

1.5 Share Incentive Plans

Initially known as all-employee share ownership plan, SIP was introduced in Finance Act 2000 largely as a replacement for Approved Profit Sharing schemes (more information on Approved Profit Sharing schemes can be found in the next section).

The Share Incentive Plan has three key elements as follows. For free shares, employers can give employees up to £3,600 worth of shares each year. For partnership shares, employees can buy up to £1,800 of shares or spend 10% of their income for the tax year (whichever is lower) out of pre-tax and National Insurance earnings. Finally, for matching shares, employers can give up to two free shares for each partnership share bought by the employee.

If the employer’s scheme allows it, employees may be able to buy more shares with the dividends received from free, partnership or matching shares.

All shares are held in trust on behalf of employees. When an employee leaves, all their shares come out of the plan.

Employees do not pay Income Tax or National Insurance contributions on the value of the free or matching shares given to them provided they keep them in the plan for at least five years. If they leave (or take them out of the plan for another reason) between three to five years, there is no Income Tax and National Insurance contributions charge on growth in value. If they take them out of the plan within three years, Income Tax and National Insurance contributions are payable on the market value of the shares at the time the employee takes them out.

The value of the dividends can be reinvested in more plan shares. If these reinvested shares stay in the plan for three or more years, then there is no Income Tax charge. No CGT is payable on any increase in value while the shares are in the plan. When the shares are sold, the cost for calculating CGT liability (if any) is the market value of the shares on exit from the plan and not the market value at acquisition.

1.6 Approved Profit Sharing Scheme (not used since December 2002)

From 1978, employees under Approved Profit Sharing schemes received the special tax treatment for share awards, but this was phased out following the introduction of Share Incentive Plan. No new profit sharing schemes were approved after 5 April 2001. Awards under existing schemes ceased in 31 December 2002 although employees can continue to hold tax-advantaged shares from past appropriations.

A final version of the Approved Profit Sharing statistical table was produced in July 2005 and is available on the Employee Share Schemes statistics page.

1.7 Discretionary Share Option Schemes (not used since 1996)

Tax relief for Discretionary Share Option Schemes was introduced in 1984 and ceased in 1996, when no further options could be granted. Employees were given the right (‘option’) to buy shares at an exercise price fixed when the option was granted. Granting of options under these schemes was discretionary in that the company was free to decide which employees or full time directors could participate. Options did not have to be linked to any kind of savings arrangement and employees were not obliged to exercise their options. The value of options that could be held by an individual was limited to the greater of £100,000 or four times the individual’s salary for the current or preceding year.

1.8 Transfers into an Individual Savings Account

Employees who acquire shares from a tax-advantaged all-employee share scheme (i.e. SAYE Share Option Scheme, or Share Incentive Plan) may transfer them directly into the stocks and shares component of an Individual Savings Account (ISA). ISA managers cannot accept shares acquired via tax-advantaged discretionary share option schemes (i.e. Company Share Option Plans and Enterprise Management Incentives).

Employees’ shares must be transferred into an ISA within 90 days of emerging from the scheme. The aggregate market value of the shares when transferred must be within the normal annual ISA subscription limits. If shares are transferred, then there is no charge to CGT. Prior to the introduction of ISAs, from 1992, shares acquired via tax-advantaged all employee schemes could similarly be transferred into a single company Personal Equity Plan.

1.9 Policy changes

Table 2: Policy changes that may affect the statistics:

Policy Change	Date	Impact on Statistics
Company Share Option Plans replaced Discretionary Share Option schemes	1996	As the Discretionary Share Option Schemes had a limit of the greater of £100,000 or four times earnings, and the Company Share Option Plans has a limit of £30,000 per employee, the change would have led to a fall in the value and average value of options granted. The change would also have led to a fall in the cost of income tax relief, but this would have been delayed for a few years as under CSOP there has to be a three-year gap between the grant of option and its exercise.
New schemes were not approved for Approved Profit Sharing schemes after the tax year ending 2001. No further shares were appropriated to employees by existing schemes from January 2003.	2000 and 2003	The value of appropriations and cost of the scheme in the tax year ending 2003 is lower as it only covers a part year.
Limit of EMI shares that can be granted to each employee increased from £100,000 to £120,000.	April 2008	The change will have allowed employees to make larger grants of shares, and to grant additional shares to employees who were previously at the limit. As a result, it may have increased the number of employees to whom options were granted compared to what would have happened without the policy change. It is likely to have increased the value of shares and average value of options granted. The higher level of grants is likely to feed through to higher exercises, accumulating over the ten-year period after the policy change due to the time in which employees can exercise options with a tax-advantage.
Limit of EMI shares that can be granted to each employee increased from £120,000 to £250,000.	June 2012	The effects of this change are expected to be similar to the impacts described above for the limit increase from £100,000 to £120,000.
The employee contribution limit for SAYE schemes increased from £250 to £500 per month. Increases in the annual limits for awards or purchase of SIP shares from £3,000 to £3,600 for free shares and from £1,500 to £1,800 for partnership shares.	April 2014	These changes will not have affected the National Statistics published for years up to and including 2013/14.

Increases in the SAYE and SIP saving limits prior to 1991 and 2000 respectively have not been included.

1.10 Further information

Detailed guidance on employee share schemes can be found on Employment related securities: detailed information.

2. Methodology

2.1 Data source

From April 2015, HMRC introduced a requirement for companies to submit their annual share scheme returns online for the first time. The Employment Related Securities service encountered some technical difficulties in the first year, affecting the supply of data for the tax year ending 2015. It was therefore not possible to update these National Statistics using data from the tax year ending 2015.

The data used for the National Statistics for the tax year ending 2016 onwards is taken from the return templates submitted online for the the tax year ending 2017. These templates can be found online at the Employment related securities return templates and forms page along with the EMI1 form for notifying HMRC of the grant of options in an EMI scheme. As with the paper returns, the templates are required by HMRC in the July following the end of the tax year.

The data used for the National Statistics for years up to the tax year ending 2014 comes from the annual paper return forms found at the (Employment related securities return templates and forms page) along with the EMI1 form notifying the grant of options. The forms were due back to HMRC either in the July at the end of the tax year or 30 days after the issue of the form if the form was issued later. Once the forms arrived at HMRC, they were checked and sometimes used for compliance work.

Information from the forms was keyed into a database to produce the National Statistics. For larger schemes with returns detailing more than 30 employees, we only captured data for a sample of employees and grossed the data based on the sampling rate to estimate the total for that company. Only fields required for updating the National Statistics were captured from the forms. Data capture finished in the spring each year, after which the data would be prepared for publication. Returns received after the keying process completed (late submissions) would not be captured and were therefore not included in the statistics.

2.2 Number of companies

For the tax year ending 2016 onwards, the number of companies with any type of scheme is counted from full data at the time of compiling the statistics, which can include some submissions received late. The number of companies is determined by counting unique employers submitting returns for each of the scheme types. A similar methodology is used across all scheme types.

For years up to the tax year ending 2014, the number of companies for SAYE, CSOP and SIP was taken from a database of schemes that contained information on whether a company had more than one scheme of the same type. The number of companies with each scheme was counted based on the information for all the schemes that have not reported that they have ceased on their annual return or have had their approval withdrawn.

A different methodology was used for EMI, as companies do not report that they have ceased on their annual returns, where they are treated as not being live if they do not have any options remaining in the scheme. Using the same methodology for the EMI companies as that used for the other schemes would have over-estimated the number of companies with a live EMI scheme.

This methodology for EMI companies was applied to data for the tax year ending 2008 to the tax year ending 2014, but for earlier years this had proved more difficult due to a lack of data on the companies holding SAYE, CSOP and SIP schemes and so we estimated these numbers by approximating the level of overlap between the schemes. This means there may be some error around these estimates; however, the series should still provide a good indication of the trends in numbers of share schemes over time.

2.3 Live Schemes/Companies Granting Options

For SAYE, CSOP and SIP we have historically published data on the ‘number of live schemes at the end of the financial year’. A ‘live’ scheme can be defined as one that has been approved to run by HMRC and has neither ceased nor had its approval withdrawn. This will include schemes where there has been no activity (e.g. options awarded or exercised) in that year. As companies may have more than one share scheme of the same type, the number of companies operating a particular scheme type tends to be less than the number of “live” plans reported. This data is now part of Table 8.

Since a user consultation in 2012, we have included the number of companies granting options or awarding shares as in the case for SIP. This will only include a company once if there is more than one scheme and will only include the companies that granted options in that year. It is not comparable to the data in Table 8, as it does not include schemes that are live but have not granted options.

2.4 Grants

The number of companies granting options or shares is the first data column in each of the individual scheme tables (i.e. Tables 3, 4, 5, and 6).

For each of the share schemes we also publish information on grants, i.e. the share options that have been granted to employees under the SAYE, CSOP and EMI schemes. Under the SIP scheme, employees are directly awarded or purchase shares that are held in a plan, and so the data on grants looks at the shares going into SIP plans.

CSOP

The number of employees to whom options are granted during the year is taken directly from the box on the return that asks for the number of individuals granted options in that event. As companies may grant options to the same employee at different times throughout the year those employees will be counted more than once.

The initial value of options granted is calculated by taking the market value of options granted and multiplying it by the total number of options granted.

The average value of shares granted is calculated by dividing the initial value of options granted by the number of employees. To produce a more accurate estimate, this is done using unrounded data, which can mean there are differences compared with if this was calculated from the rounded data shown in the table.

The data is cleaned by checking for unusual values and missing values. More information on this can be found in the section on quality below.

EMI

For EMI we publish the number of live companies granting options and the number of employees to whom options are granted. The data comes from the EMI1 notice of an option granted form and we count the number of HMRC unique scheme reference numbers and the number of unique National Insurance numbers. Any missing National Insurance numbers are taken to represent a unique employee per record. For the tax year ending 2016 data onwards, in most cases where no national insurance number is provided individuals can be uniquely identified, making it less likely that duplication will occur when counting the number employees.

Similar to CSOP, the initial value of shares over which options were granted during the year is estimated by taking the market value of a share at date of grant and multiplying it by the maximum number of shares over which this option is granted. The average value of shares granted is calculated by dividing the initial value of options granted by the number of employees. To produce a more accurate estimate, this is done using unrounded data, which can mean there are differences compared with if this was calculated from the rounded data shown in the table.

The data is cleaned by checking for unusual values and missing values. More information on this can be found in the section on quality below.

SAYE

Under the SAYE scheme, employees are granted options when they begin a savings contract. For example, if an employee started a three-year contract into which they would be saving £100 per month, the employer would grant options at the start of the contract that would allow the employee to buy shares at a price of £3,600. The market price may be higher as companies are allowed to grant the options with a price up to 20% below the market price. In addition, they would need to grant options to cover any tax-free bonuses.

The number of employees to whom options are granted is taken directly from the box on the return that asks for the total number of directors and employees to whom options are granted.

As with CSOP and EMI, the initial total value of options granted is calculated by multiplying the market value of options granted by the number of shares of which options were granted. For all but a few companies, options are only granted once a year so there is only one price supplied. Prior to the introduction of the online filing system, for the companies with more than one price an average was taken of the prices since we do not know how many shares were granted at each price – this is unlikely to make much difference to the data since it applies to a very small number of schemes. This limitation does not apply for data collected after the tax year ending 2014.

The average value of shares granted to each employee is calculated by dividing the total initial value of options granted by the number of employees. To produce a more accurate estimate, this is done using unrounded data, which can mean there are differences compared with if this was calculated from the rounded data shown in the table.

The data is cleaned by checking for unusual and missing values. More information on this can be found in the section on quality below.

SIP

Under SIP, employees are awarded shares directly, rather than options to purchase shares. Those shares are then held in the SIP plan and appropriated by the employee at some point in the future. The minimum duration that shares are held in the plan will depend on the type of share (i.e. free, partnership, matching or dividend).

The number of employees awarded or who purchased shares is taken directly from the box on the return that asks for the number of participants in this award or acquisition, and it is categorised by type of award based on the information supplied in the same section. If an employee receives more than one award in a year, which could be of the same or different types, they will be recorded in the return each time and therefore employees may be counted more than once in the data.

The value for each type of shares awarded also comes directly from the return and the average value of shares is calculated by dividing the total value of shares awarded by the number of participants. To produce a more accurate estimate, this is done using unrounded data, which can mean there are differences compared with if this was calculated from the rounded data shown in the table.

The data is cleaned by checking for unusual values and missing values. More information on this can be found in the section on quality below.

2.5 Exercises and Costs

The data on exercises for SAYE, CSOP and EMI shows the employees who bought shares by exercising their options. Employees receive awards of shares rather than options under SIP and so there are no options to exercise.

Following a user consultation in 2012, we included the number of companies where employees exercised options to buy shares. This will only include a company once if there is more than one scheme and, as implied by the title, will only include the companies that had employees that exercised their options in that year. It is not comparable to the data on live schemes in Table 8 since the number of companies where employees exercised options for each scheme will be less than the number of live schemes.

For each plan, we publish data on estimated Income Tax and National Insurance contribution costs. These are calculated by multiplying gains (estimated as per the descriptions below for each scheme) by estimated average marginal Income Tax and National Insurance contribution rates. The tax rates applied to these have been estimated using the income distribution from our published research reports (the Evaluation of Tax-Advantage All-Employee Share Schemes and the EMI evaluation survey) along with the Income Tax rates and National Insurance rates for the relevant year. While some assumptions have been made to estimate the average tax-rates alongside the evaluation reports, particularly for the discretionary schemes, the costs have been found to be relatively insensitive to the assumptions.

The costs given are the costs of Income Tax and National Insurance contributions relief only. They are calculated by comparing the values of Income Tax and National Insurance contributions relief obtained on the gains at the exercise of CSOP, EMI and SAYE options and the values of shares appropriated to employees out of SIP plans. The figures represent the amount of Income Tax and National Insurance contributions that would have been paid by the employees had they been paid in cash of equivalent value to the gains.

For SAYE, CSOP and EMI there may be some additional CGT received as CGT will be due on the gain made on the option as well as on the share when it is sold. SIP conversely may lead to a CGT cost, as no CGT is due on the gain in share price while the shares are in the plan. We do not estimate the cost of CGT, as we cannot link the shares in the schemes to the CGT reported via the self-assessment form. It is difficult to know how much more or less CGT may be paid and when, since we do not know how long after the exercise the shares will be sold. We also do not know to what extent the CGT might be relieved, for example if the shares from a SAYE scheme are put into an ISA or if the gains are under the annual exempt amount for CGT.

In some circumstances companies may deduct some or all of the costs associated with operating employee share schemes from their Corporation Tax liability. This information is not collected in the data used to compile these statistics and is not covered by this publication.

CSOP

For CSOP we publish the number of employees who exercised options during the year. This is taken directly from the number reported on the return. The online filing system introduced in the tax year ending 2015 allows counting of individuals based on a number of fields. This should result in increased accuracy of the counts of individuals exercising options within the tax year. The counts may also include some late submissions if they were received before compiling the statistics.

The gain on exercise is estimated by multiplying the number of shares acquired by the market value of a share on the date the shares were acquired. We then deduct the total amount paid for these shares by multiplying the number of shares acquired by the exercise price per share. To calculate the Income Tax and National Insurance contribution costs, we identify the gains which qualify for relief and then multiply these by the average marginal Income Tax and National Insurance rates as described above to give the estimated costs.

EMI

For EMI, we publish the number of employees who exercised options each year. This is calculated by counting the number of unique National Insurance numbers for exercised options on the annual return. Any missing National Insurance numbers are taken to represent a unique employee per record.

For data collected after the tax year ending 2014, the number of employees can be determined more accurately. All individuals are assigned a unique reference number within the database and this allows only unique individuals to be counted, even when the National Insurance number is not provided.

The gain on exercise is estimated by calculating the difference between the value of the shares acquired at the date options are exercised and the value of the shares acquired at the date the options were granted. For tax years the tax year ending 2014 and earlier, the proportion of relievable gains is estimated based on previous year’s figures. From the tax year ending 2015, the data collected includes information on eligibility for Income Tax and National Insurance contributions relief, meaning we no longer estimate this proportion and calculate the total gains and relievable gains directly from the data provided and this should allow for statistics that are more accurate.

The estimated marginal Income Tax and National Insurance contribution rates are then applied to the relievable gains total to estimate the total Income Tax and National Insurance contributions relief for EMI.

SAYE

For SAYE we publish the number of employees that exercised options. This is taken from the number reported on the return. For years after the tax year ending 2014, the number of employees is counted from data recorded in the return and the gain on exercise is calculated by multiplying the number of options exercised by the market value on the date the options are exercised. The market value is recorded individually for each event where options are exercised, removing the risk of over or under-estimating gains due to market values fluctuating throughout the year.

For years prior to the tax year ending 2015, the gain on exercise is estimated by multiplying the number of shares acquired on the exercise of the option by the market value on the last date that the options were exercised, then deducting the total amount paid for these shares. The gain is then multiplied by the marginal Income Tax and National Insurance rates as described above to produce the estimated costs. This means that the cost only includes the gain made by exercising any options. It does not include the cost of the relief on the bonus, although it will include the cost of any gain made on options purchased using the bonus.

For the tax years ending 2008, 2009 and 2010 the market value on the date the options were last exercised was an optional box on the form and so this box was often not filled in. Where this value was missing, we first looked to see if there was a market value for that year in one of the other sections of the form (usually the market value at grant) and if that was missing we instead used an average share price for the year from publicly available information. In any remaining cases for which no share price is available, we assumed the market value was the same as the price paid. (Note: this is a change in the methodology; see below for more information.)

For years prior to the tax year ending 2015, we use the market value on the date the options were last exercised, as it is the only field available on the value of options at exercise. This field might over-estimate or under-estimate the gains in the year depending on if share prices are generally rising or falling in that year. For example, if share prices are rising then the market value of the shares acquired at the end of the year is likely to be higher than the market value of any shares acquired earlier in the year and so we will over-estimate the gain. Using the market value of shares granted in that year, or average market values, where there is no date on gains may under-estimate the gains since options may be more likely to be exercised when prices are higher (in some cases they will only be in profit and worth exercising when the price is higher).

SIP

For SIP, there are no exercises of options, as shares are awarded rather than options being granted. Shares need to be held in the plan for a minimum duration to be eligible for Income Tax and National Insurance contributions relief.

The value of the shares leaving the plan early are taken from the boxes on the form or template on forfeiture, the boxes on shares leaving the plan within three years of award and shares leaving the plan between three and five years for award. For the latter two categories, the data in these boxes will contain some “good leavers” who still get tax relief despite leaving the plan early. For years up to and including the tax year ending 2012 we assume that 20% of the value of the shares leaving within three years went to good leavers, and that this was also the case for 50% of the value of shares leaving between 3 and 5 years. After removing these good leavers, we deducted the value of shares leaving the plan early with no relief from the value of shares awarded, although the shares leaving the plan are likely to have been awarded in earlier years. This gives a net value awarded, from which the estimated costs are produced by multiplying the net value by the average marginal Income Tax and National Insurance rates.

From the tax year ending 2013, we captured data about whether tax was due when shares ceased to be subject to SIP plans from the tax return. We used this data to calculate the values of shares leaving the plans within five years of them being awarded to “good leavers” who still qualified for Income Tax and National Insurance contributions relief despite leaving the plan early.

The online filing system introduced in the tax year ending 2015 allows companies to record whether shares ceasing to be part of the plan were held for over five years, whether PAYE was operated and whether the withdrawal qualifies for tax relief. From this data, it is possible to identify those shares that are leaving the plan that are automatically eligible for tax relief or are eligible due to being a “good leaver”.

3. Data quality

For further information on data quality in addition to this section, please see the Quality Report for the Employee Share Schemes statistics which are available on the Employee Share Schemes website.

3.1 Non-sampling error

One source of error in the data is where data has been entered incorrectly, either by the company sending the form or as part of the data entry process. Common mistakes made by companies include incorrect currencies being used on the form, the price being entered in pence instead of pounds or the total value of shares being entered instead of the value for individual shares. Prior to the tax year ending 2015, when the online submissions began, an error might be made in keying in the values from the form at the data entry stage.

To identify these errors we check the data for outlying values, against the share schemes limits and check the data in the electronic databases against data from the paper tax return form itself. We also use other available data to estimate the correct value such as historical share prices from publicly available information, data from other parts of the form, or data for the same company for another year.

These errors include boxes that have been left blank, but where other boxes on the form suggest there should be data. This is particularly a problem where data fields are “optional” and so there is a high level of non-response, which particularly affected the SAYE data on market value on exercises for the tax years ending 2008, 2009 and 2010. The potential problems of this on the data quality are described above.

From the tax year ending 2015, companies submit their completed returns or notifications online using the Employment Related Securities returns system. This removes the chance of manual input error within HMRC processing but does not remove the chance of manual input error by companies when completing templates. Templates that are submitted through the Employment Related Securities returns system are subject to an electronic validation check that includes assessing the type and format of data entered and checks for any missing mandatory information. Only data from templates that pass this initial validation will be included in this publication. Further checking of data received through the online system is completed in a similar way to that described for paper returns.

3.2 Sampling error

Since data for 2015-16 is taken from electronic templates submitted online, employees no longer need to be sampled for data capture so there should not be any sampling error for the data for tax year ending 2016.

As described in the methodology section we use data from all forms but for years prior to the tax year ending 2014, where data was provided at individual employee level, we would sample employees if there were more than 30 in that section. This means that there will be some sampling variability around the data, although we do not expect this to be large since many company employees are not sampled.

3.3 Assumptions

A number of assumptions and estimates are used to produce the statistics. These include assumptions made to calculate the marginal Income Tax and National Insurance rates used and the proportion of “good leavers” under SIP for years up to and including the tax year ending 2012. Sensitivity testing on the marginal Income Tax and National Insurance rates suggests that these assumptions are unlikely to make a significant difference to the data. As the awards make up more of the costs of SIP schemes than the leavers do, the assumptions on leavers are unlikely to have had a large effect on the overall result.

3.4 Time series data

As part of creating the National Statistics in the tax year ending 2011, we reviewed the checks we carry out to validate the data on the share schemes forms and added further checks. These include checking the cases with the highest values on a number of fields (such as share price, numbers of employees, total awards and gains on exercise) against publicly available information on share prices. We also checked the data against the rules applying to each scheme (such as maximum awards) and checked the data in the form against itself (for example checking market value of awards against market value of exercises). This led to identifying and correcting more cases where there appear to be errors on the forms compared with previous years. It also led to changes in some cases to how we were estimating missing values.

Cleaning the data is a large manual task, so we have cleaned the data for the tax year ending 2008 and subsequent years, but not the full historical time series. Users may wish to be aware that there may be similar problems in the earlier years, and care will need to be taken in comparing with the data for years prior to the tax year ending 2008.

3.5 Numbers of employees

For SAYE, the number of employees granted options and exercising options comes directly from the form or template. For number of employees granted options an employee may be counted more than once if their company has more than one scheme and they are in both schemes. For number of employees exercising options, from the tax year ending 2015 onwards, the number of employees will be determined by counting a unique reference number for the individual, preventing duplication where more than one event occurs in a year.

Similarly, for CSOP the number of employees exercising options comes directly from the form or template. The number of employees granted options comes from the options granted section of the form or template, which summarises each event providing a total number of participating employees, and an employee may be counted more than once if the company grants options over multiple events throughout the year.

For SIP, there are more repeat awards in a year and the scheme might be used by employees for regularly buying shares, e.g. monthly. As a result, the number of partnership awards is thought to be considerably higher than the number of employees receiving awards. We do not know the extent to which employees are counted more than once in the awards and so estimates of the number of employees participating in SIP schemes in Table 5.2 may be considered an upper bound.

Companies can operate more than one type of scheme. In some circumstances, one employee could participate in multiple schemes for one or more employer. Where this does occur the data collected from returns is insufficient to identify the level of duplication in employee numbers.

3.6 Costs

The published costs within this commentary are estimates of the Income Tax and National Insurance contribution reliefs. There may also be additional CGT receipts (for SAYE, CSOP and EMI) or less CGT (from SIP) but we are not able to estimate this for the reasons set out in that section. There may be some circumstances where costs to the companies for operating the schemes can be deducted from Corporation Tax liabilities. This is not accounted for in these statistics.

3.7 Rounding

Where possible we use the unrounded data in calculating averages and other information. This means that calculations done using the published rounded data may lead to different and less accurate results.

4. Other information

4.1 Publication and Revision Strategy

National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

Release dates will be announced on the UK Statistics Hub and the HMRC National Statistics release schedule. Any delays to the publication date will be announced on the HMRC National Statistics website.

Each year we receive new data for the most recent year only for SAYE, SIP and CSOP and so the historical time series will only change if it is necessary due to a significant methodological change.

For EMI prior to the tax year ending 2014, we had a database that may also receive new data for older years. We used the latest available data for each publication, which means that the historical data may be subject to change each year, however retrospective changes are not made during the course of compiling these statistics.

From the tax year ending 2015, data is collected in a more standardised way across all tax-advantaged share schemes using the online Employment Related Securities returns system. This system removes the stage of data input within HMRC for producing these statistics. This means that some late submissions or revisions that occurred after the data capture process may now be included in the statistics.

4.2 Statistics Users and User Engagement

We encourage our users to engage with us so we can improve our official statistics and identify gaps in the statistics that we produce. Contact details for the statisticians who produced these statistics are given at the front of this document.