Friday 20 September 2019

Building society threatens to quit savings scheme

Brexit could see Yorkshire Building Society's 10,000 Irish savers miss out on SAYE financial gains

The society has written to junior finance minister Michael D'Arcy saying it won't be able to continue operating 'Save-As-You-Earn' (SAYE) schemes here without a Brexit deal. Photo: Tom Burke
The society has written to junior finance minister Michael D'Arcy saying it won't be able to continue operating 'Save-As-You-Earn' (SAYE) schemes here without a Brexit deal. Photo: Tom Burke
Gavin McLoughlin

Gavin McLoughlin

Yorkshire Building Society has pleaded with the Government to take action or risk 10,000 Irish savers being left out of pocket.

The society has written to junior finance minister Michael D'Arcy saying it won't be able to continue operating 'Save-As-You-Earn' (SAYE) schemes here without a Brexit deal.

It has asked the Finance Department to amend legislation in a way that it believes would safeguard the SAYE schemes even if no Brexit deal is struck.

"Given ongoing negotiations over Brexit, we have looked into obtaining an Irish banking licence to continue offering this service," the society's letter to Mr D'Arcy reads.

"However, we have concluded that the costs of authorisation would be disproportionate to the benefits of doing so.

"In the event of a no-deal Brexit, or a deal without equivalence in place, we will no longer be able to continue deposit-taking on a cross-border basis in Ireland... unless an alternative arrangement can be put in place, that would mean the [circa] 10,000 savers we have would no longer qualify to receive shares on a tax-efficient basis at the end of next year".

The SAYE schemes are designed to allow employees buy shares in the companies they work for in a tax-efficient manner.

The employees are granted options to buy shares, then save with a third-party financial institution for a period of years, and at the end of the period then buy the shares using the savings that have been put in place.

Yorkshire said it has around 10,000 people using the scheme in Ireland, and that it is one of three financial institutions that provides the scheme.

Another is Barclays, which may be similarly affected by Brexit but did not respond to a request for comment on the matter yesterday.

That could potentially leave Ulster Bank as the only bank providing the SAYE services here, Yorkshire said, adding this would have "obvious consequences for competition and for key institution dependencies".

Revenue told the Irish Independent that in most cases it's not possible for a SAYE saver to transfer their savings to another institution.

There are exceptions, Revenue said, but they do not apply in cases where the financial institution ceases to qualify as an offerer of the scheme as would be the case in this instance.

Instead what happens is that savers are refunded their money - meaning they miss out on the chance to acquire shares in a tax-efficient manner, as well as the potential value that could be seen if the shares rise.

"We will need to await the final outcome of negotiations between the EU and the UK to determine the implications, if any, for certified contractual savings schemes, post-Brexit," Revenue added.

The Department of Finance did not respond to a request for comment.

The letter was co-authored by the Irish Pro-share Association, a lobby group promoting employee share ownership.

Its CEO Gill Brennan said: "This isn't going to cost people at the very top, it's going to hit those in the middle - regular employees who use these SAYE share schemes to save towards things such as home deposits, home improvements, cars, holidays and weddings."

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