Steph Court, of accountancy firm RSM, said: “When it comes to capital gains tax, employee shareholders are largely along for the ride.”
In 2022-23, an estimated 350,000 workers were granted options through SAYE, according to official figures.
Employees can save up to £500 a month into the scheme and at the end of the three- or five-year contract, they can buy their company’s shares at an already-agreed discount. If the prevailing share price is higher than the purchase price, then the employee can sell for a profit – otherwise they get back their savings along with any interest or bonus tax-free.
Experts are concerned that many workers participating in SAYE do not take the necessary steps to shelter their investment profits from capital gains tax. Shares under SAYE must be transferred into a tax-free wrapper such as an Individual Savings Account (Isa) in order to avoid a capital gains tax hit.
By comparison, shares held under another share option scheme called a Share Incentive Plan (SIP) will be free from capital gains tax as long as they remain in the plan until the point of sale.
The previous government held a consultation on all-employee share plans but failed to respond to its call for evidence before the election.
During this consultation, ProShare urged the then government to introduce a £10,000 capital gains tax allowance for tax-advantaged share plans.
ProShare said that eroding the tax benefits of SAYE plans could see them “disappear” altogether.
Mr Tompsett said: “The Government’s own studies show that when participation is widespread among employees, productivity increases and financial resilience grows.
“But many are now being put off by the added complexity, and it’s those employees on lower incomes who are most likely to stop engaging.”
He added: “Our research shows that a significant number of participating employees have no other form of savings. These are the ordinary workers the Government has promised not to tax, and we urge the Chancellor to respond to the consultation, or risk employee share plans disappearing under her watch.”
HM Treasury was contacted for comment.