Royal Mail Shares – Share Incentive Plan (SIP) 2014 Free Share Offer
Further to LTB 602/16, this LTB is to notify Branches and Representatives that we are now approaching the third anniversary of the SIP 2014 free share offer. From the 9th April 2017, eligible employees will be able to sell shares they were awarded in October 2013 and April 2014.
Under the rules of the SIP, employees can keep their shares for as long as they like while they remain a Royal Mail employee. Those wishing to hold onto their shares do not need to take any action – they will stay in the Share Incentive Plan (SIP) and continue to receive any dividends while employed in Royal Mail.
From 15th October 2016, employees had the option of selling their shares (for the first time) and receiving a cash payment based on the RM share price. However, those looking to cash in and sell their shares (after 15th October 2016 and before 14th October 2018) should note they will have to pay tax and national insurance. Basic rate taxpayers will need to pay 20% income tax and 12% NI, while higher rate taxpayers will pay 40% income tax and 2% NI (assuming the full amount of NI at 12% has already been paid).
Ultimately, what members choose to do with their shares after 9th April is a personal decision but those who plan to sell should be fully aware of the significant tax and NI they will have to pay which is likely to reduce any payment by around a third.
The company has notified the CWU that they intend to handle the latest share event in a similar way to the SIP 2013 share sale conducted in October last year. The only material difference this time is that many employees will have shares from both SIP 2013 and SIP 2014 available to sell. This potentially adds a complication of different award prices (489p and 511p respectively) and therefore different taxable values (if the sale price is greater than the lowest award prices). This may lead some to consider how many shares to sell from each award or if they sell any at all. To help with this process, Royal Mail say the Trust has been set up in a standard way that will mean the Trustee has to sell the oldest shares first.
To explain the process to its workforce, all eligible Royal Mail employees have been reminded about the approaching anniversary in their SIP annual statement mailed out to all SIP free shareholders in the week commencing the 6th March 2017. There will also be a news story on Royal Mail’s internal digital channels a week before the anniversary date.
Equiniti will again handle any sale instructions via the same online and automated telephone channels as last time with all the supporting information an employee may need available on the Equiniti Employee Share Portal or via the normal Employee Shares Helpline.
As the CWU are not able to provide any financial advice to individual members they may also want to seek independent financial advice before making any decision. If members have any questions, they can also phone the Royal Mail Employee Shares
Helpline free on 0800 012 12 13 or check the information available at:
Any enquiries in relation to this LTB should be addressed to the DGS(P) Department quoting reference 60000i.
Deputy General Secretary (Postal)