• Employees with SAYE options face losses and increased taxes
  • UK banks holding SAYE accounts for employees at Irish companies because Irish banks prohibited from doing so as part of bailout
  • Call for Government Brexit negotiators to intervene

The CEO of the Irish ProShare Association today warned that more than 10,000 Irish employees face being left out pocket over company share schemes unless the issue of Brexit passporting rules for financial firms is dealt with soon.

Current passporting rules enable financial firms in the UK to sell their services throughout the EU with a UK banking license, rather than getting a license to operate in each member state where they do business. With Brexit this will end, and it could have a particularly adverse impact on employees at Irish companies who have Save As You Earn (SAYE) savings schemes.

According to IPSA CEO Gill Brennan, Irish employees could be forced to liquidate their savings early and if process is not in place, they could face loss of benefits and negative tax consequences when they repatriate the money.

Of all approved employee share plans currently in operation in Ireland, 18% of those are SAYE plans. Under this scheme, a company grants options over shares to its employees at a discount of up to 25% on the normal price or the employee, on maturation of the plan, can take the saved money to use as they wish. Many employees tend to use money from SAYE schemes towards items such as home deposits, home improvements, cars, holidays and weddings.

Following the financial crash one of the provisions for the bank bailout was that Irish national banks could no longer offer share schemes for their employees nor could they act as holders of SAYE savings accounts. This left the market open to UK banks, such as Barclays and YBS (Yorkshire Building Society), to be the entity holding the SAYE accounts for employees at Irish companies.

Ulster Bank, which is owned in the UK by Royal Banks of Scotland, is currently the only bank holding SAYE accounts which has the necessary Irish approvals and whose customers aren’t in the firing line.

Ms Brennan said: “According to a report this week from the European Banking Authority (EBA), banks have failed to make enough progress in their Brexit preparations and this is a very worrying in terms of the potential downside for Irish employees with SAYE share option plans.

“Most of our members surveyed that are currently utilising revenue approved Save As You Earn share option plans noted that the banks that are holding their savings are all either UK-based or UK-headquartered. We found that across IPSA members, these banks are at present holding SAYE savings for Irish employees in the region of €12m on behalf of nearly 10,000 employees in Ireland.

“If the Brexit financial passporting issue is not resolved then these employees could face unexpected tax bills and loss of expected benefits.

“This is only a drop in the ocean. If it is in any way reflective of many/hundreds/thousands of other companies that have availed of this revenue approved SAYE scheme, it has to raise a concern among the Government’s Brexit negotiators.”

Ms Brennan’s comments come in the wake of the European Banking Authority this week stating that banks have failed to make enough progress in their Brexit preparations and should not expect “miracle” public intervention to help them.

It also comes after British Prime Minister Theresa May signalled, in a major speech on Brexit priorities in March, that passporting was not important for her government. She said: “We’re not looking for passporting because we understand that it is intrinsic to the single market, which we would no longer be a member of. It would also require us to be subject to a single rulebook over which we would have no say.”

Ms Brennan added: “The purpose of the SAYE scheme is to retain staff, provide employees with the option to save so they can become part owners of the company they work for and to act as an incentive to retain staff. All of these things that have proved to be beneficial to so many SMEs will be lost if nothing is done. We would urge the Irish Government to give this issue some serious consideration as it heads into further Brexit negotiations in the autumn of 2018.”

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