At present, HMRC-approved SAYE option schemes and share incentive plans (SIPs) must offer participation to all qualifying employees who are resident and ordinarily resident (R/OR) and may offer participation to others, such as those who are resident but not ordinarily resident (R/NOR).

Finance Bill 2008 (FB 2008) proposed to make it mandatory to include all qualifying R/NOR employees. This was a result of reforms to the taxation of non-domiciled and R/NOR individuals.

Employers and various specialists (including PLC Share Schemes & Incentives) pointed out that this could be a burden, especially given how few employees would benefit from the changes. HMRC were sympathetic and draft government amendments to FB 2008 published on 30 May 2008 aim to leave employers with discretion as to whether R/NOR employees participate.

Although the way in which these schemes are run will now remain unchanged (assuming the proposed amendments are adopted in committee), all SAYE and SIP scheme rules will still require review. Some will need to be amended to comply with the SAYE and SIP legislation, which will still be altered by FB 2008. For example, some SIP scheme rules may define qualifying employees who must be offered participation as those with earnings taxable under "section 15 or 21" of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA). They will need to be amended after FB 2008 is enacted to define these qualifying employees as either those:

(1) With earnings taxable under section 15 of ITEPA who are also ordinarily resident; or

(2) Who are UK resident taxpayers as defined in paragraph 8(2) of Schedule 2 of ITEPA.

Similar issues may arise for SAYE option scheme rules.