EUROPEANCHAPTER

The recent Budget introduces changes that will impact the cost and compliance of employee share plans, including an increase in employers' National Insurance Contributions (NIC) from 13.8% to 15% from April 2025, which could make tax-advantaged share plans more appealing. Additionally, increases in capital gains tax (CGT) rates and reductions in CGT exemptions may lead to higher tax obligations for employees, potentially affecting the attractiveness of these plans, while employers may need to enhance support and communication to help employees navigate these changes. For internationally mobile employees, the new tax regime replacing the remittance basis introduces limitations and complexities, requiring employers to reassess their compliance strategies and tax equalization policies.

Thales has launched its 2024 Employee Share Ownership Plan, allowing employees across 36 countries and retirees to purchase shares at a 20% discount with a 50% matching contribution on investments up to €500. The plan, which aims to strengthen employee alignment with the company’s goals, offers 600,000 shares at a discounted price of €119.69, with participants required to hold the shares for five years, except under early release conditions. This initiative, set to run from November 4–24, 2024, provides tax-efficient savings and investment opportunities for employees and retirees, supported by local legal and regulatory compliance.

The Investment Association (IA) has released updated remuneration principles, offering greater flexibility for UK-listed companies to structure executive pay in ways that attract and retain top talent in a competitive global market. Key changes include relaxed dilution limits, with the 5% restriction on discretionary share plans removed, and allowances for evergreen employee share plans that no longer require shareholder approval every 10 years. While these updates provide companies with more discretion, they must still align with existing shareholder-approved remuneration policies and plan rules, ensuring compliance while leveraging the new flexibility to meet strategic objectives.