ShareBonus. Taking part of your bonus as tax-free shares

Transcription

1 ShareBonus Taking part of your bonus as tax-free shares

2 About ShareBonus About ShareBonus ShareBonus is your chance to build up a tax-free share in our future by taking part of your annual bonus as company shares (Rolls-Royce Holdings plc). ShareBonus is linked to our All Employee Bonus Scheme (AEBS). Under this scheme, provided we meet our targets, you can receive a bonus of up to two weeks pay: 80% (up to eight* days pay), is based solely on the performance of our business as a whole (the corporate element). 20% (up to two* days pay) also depends on the performance of your business or function. If you re employed in the UK, and are eligible for our AEBS bonus plan, you can choose to take the corporate element of your bonus, in company shares, which will be held in trust. Not only will you benefit from any increase in the value of these shares but, after five years, you can sell or transfer them free of income tax and national insurance. The remainder of your bonus will be paid in cash via payroll. If you re not in the AEBS, but participate in one of our other annual bonus schemes - ABCF, APRA, Management Bonus or the SNBG Bonus - you can still be part of the ShareBonus scheme. If you decide not to join, then we may at our discretion decide to pay you a cash bonus, but it may not be equal to the value of the shares that you would have received under ShareBonus. While your shares are held in trust, you will receive any payments to shareholders - i.e. C shares and can vote as a shareholder through the trustees. You can leave your shares in trust as long as you work for us. While in trust, any increase in their value will not be liable to capital gains tax (CGT). If our share price rises, so will the value of your shares. Although the share price can go down as well as up. *Based on a standard 5 day working week 02 About ShareBonus

3 How do I join? How do I join? You can apply online at using the details sent to you in your invitation. You will need: Your Shareholder Reference Number (SRN), from your invitation. Your Personal Identification Number (PIN). If you have forgotten your PIN, please select the Forgotten PIN link on the website and a new PIN will be sent to you or alternatively call Computershare on If you have not previously been supplied with a PIN, then your PIN will be your date of birth in eight-digit format (i.e. DDMMYYYY). To make things easy, you only need to apply to join the scheme once. You will then be a member of ShareBonus each year until you cancel your membership or leave us. How do I cancel my membership? If you decide to leave the scheme, you can cancel your membership online through the Computershare website in January each year. Computershare will send you a reminder to let you know you re a member of ShareBonus, and give you details on how you can stop your membership. Can I join ShareBonus? To join, you must live or usually live in the UK, (HM Revenue and Customs (HMRC) refer to this as being ordinarily resident ), be a UK tax payer, and be employed by Rolls-Royce or one of our participating companies. If you re working overseas and expect to return to the UK, you may also be eligible to join. Please call our HR Shared Service Centre on +44 (0) to find out if you re eligible. 03 How do I join?

4 How much of my bonus will be paid in shares? If you re in the AEBS you can choose to take the corporate element of your bonus in shares. For example, if we meet all of our targets in full you can take the equivalent of eight days pay in shares. The maximum annual limit set by HMRC is 3,600. If you re in a different bonus plan, to treat everyone equally, we work out the relevant days worth of pay based on the AEBS results, then use the cash generated by your bonus to buy shares. Any remaining cash will be paid to you via payroll. How much are my shares worth? It depends on your pay at year-end and if we meet our financial targets. If we do meet them, you can choose to take shares equal in value to the corporate element of the bonus (up to eight* days pay, depending on the extent to which we meet our financial targets) up to the maximum annual limit set by HMRC of 3,600. You should know that the share price has to be fixed for us to work out how many shares you will get. We will look at the share price around the time that we acquire your shares in April each year. So, by the time we tell you how many shares you have, the market price may have changed, and the number of shares may not exactly match the bonus amount you re expecting. How do you work out the number of shares I get? We work out how many shares you will get by dividing the bonus amount by the market value of the shares - as defined in the rules of the plan - on the day we acquire your shares in April. It s a simple calculation based on your equivalent cash bonus. For example: If your bonus is 500 and the market value of the shares is 6.50, this is the equivalent of 76.9 shares. But, because we round up to the nearest share you would actually receive 77 shares and the actual total value would be

5 If you reach the 3,600 limit HMRC sets, we have to round down as you cannot go over this amount. The residual bonus in this instance would be paid to you in the next available payroll after the shares are bought. When will I get my shares? You will be awarded your shares in April. They will be transferred to your online account with Computershare soon after the start of the tax year and held in trust. Because your shares are held in trust you won t receive a share certificate. How do I keep track of my shares? You can see all of your Rolls-Royce employee share plans and the total number of shares you have within those plans, at any time, in your Computershare account. Once a year in May, we will send you a statement showing when you received your shares and their initial market value. A copy will also be available online in the Correspondence section of your account. What happens to my shares once they ve been awarded to me? They are held in trust on your behalf for a minimum of three years. While you work for us, you can leave them there for as long as you like. Any increase in their value when in trust, is not subject to capital gains tax. If you sell your shares after three years and before the full five years, you will have to pay income tax and national insurance What about the risks? From the start the shares are yours. So, you have the risks of share ownership in as much as share prices can go down as well as up. But you get the benefits too. The value of the shares is based on the gross bonus payment you would have received. So provided you keep the shares in trust for five years, you can sell them free of income tax and national insurance. 05

6 What rights do I have as a shareholder? Your shares are ordinary shares in Rolls-Royce Holdings plc. While they are in trust, you will benefit from any payments to shareholders and can tell the trustees how to vote, in respect of your ordinary shares, at shareholder meetings. You cannot attend or vote at a shareholder meeting personally and your name will not appear on any register. Payments to shareholders - C Shares We make payments to all of our shareholders in the form of C shares. C shares have a value of 0.1p which can be converted into cash, typically in January and July each year. As long as you hold ordinary shares, you will receive an award of C shares each time we make a payment to our shareholders. Giving company shares instead of paying cash dividends improves our cash flow in future years, which again has benefits for our shareholders. For tax purposes, any C shares awarded to you are treated as though you got them at the same time as your ordinary shares and become tax free on the same five year anniversary date. With C shares you have the choice, twice a year, to: Redeem your unrestricted C shares that relate to shares that you have held for more than five years, for cash, tax free. Redeem all of your C shares for cash. Don t forget that this means you will pay tax and national insurance on restricted C shares that relate to shares that you have held for less than five years. Keep your C shares, and hold them alongside your other Rolls-Royce shares online. 06

7 Selling and transferring shares When can I sell my shares? Your shares must be held in trust for a minimum of three years before you can sell them. If you wait five years after shares were awarded to you, you do not have to pay income tax and national insurance. How do I sell or transfer my shares? You can sell or transfer your shares online through the Computershare website. You will have to pay dealing charges on any shares you sell. You can also move your shares out of the plan, either by requesting a share certificate or having them transferred into your personal nominee account, without charge. Do my shares have to come out of trust after five years? No. You can leave your shares in trust as long as you work for Rolls-Royce. They will be tax free while held in trust and you don t have to pay capital gains tax on any increase. Once your ordinary shares are released from the trust any future rise in the share price might give rise to capital gains tax. Selling and transferring shares 07 Selling and transferring shares

8 Tax What happens when I sell them? Whether you pay income tax or national insurance depends on the length of time your shares have been kept in trust. Length of time your shares have been held in trust: Less than three years Between three and five years Five years or more Income tax and national insurance payable: Shares cannot be taken out of the trust unless you leave Rolls-Royce or the relevant participating company. On lower of: (i) Market value of the shares when they were first awarded and (ii) Market value of the shares on the date of withdrawal No income tax or national insurance to pay Tax Do I have to pay capital gains tax (CGT)? You only have to pay capital gains tax when you sell your shares. The amount you pay is based on the difference between the price you sell them at and the market value of your shares at the time they were taken out of the trust. You may have to pay capital gains tax if you have made other taxable gains in the same tax year, that are more than the annual exemption allowance. You can check the current annual exemption allowance at If you sell your shares after you have taken them out of trust, you must include details of the sale on your tax return. If you keep them in trust or transfer them to another share dealing account you don t have to pay anything. We re not allowed to give financial, tax or investment advice, so the information in this brochure is a guide to help you understand how your decision could affect what you have to pay. It s based on UK tax rules for anyone resident in the UK. If you have any questions, or are unsure which option to choose, you should contact an independent financial advisor. 08 Do I have to pay tax when I m awarded my shares? No. When you re awarded shares and they are placed in trust you don t have to pay income tax or national insurance. Tax

9 What happens if? What happens if I leave Rolls-Royce? You can keep your ShareBonus shares but they must come out of the trust. Your liability to pay income tax and national insurance depends on why you re leaving. Reason for leaving What if I retire, leave due to redundancy, injury or disability, or the business I work for leaves the group or my employment is transferred outside Rolls-Royce? What if I die? What if I resign or my employment ceases for any other reason? What we ll do with your shares If you leave at any time while your shares are in the trust, you will be able to sell or transfer the shares into your own name. You don t have to pay income tax or national insurance. We will transfer your shares to your personal representative. They will not have to pay any income tax or national insurance. If you leave within three years of being awarded your shares you will have to pay income tax and national insurance on the market value of your shares on your leaving date. If you leave between three and five years after the shares have been given to you, you will have to pay income tax and national insurance on the lower of the market value of the shares when they were first given to you and the market value of the shares on your leaving date. If necessary we will sell some or all of your shares when you leave, to pay any outstanding income tax and national insurance payable at that time. What happens if? What happens if I leave before my shares are awarded? If you leave after year-end, but before the shares are awarded, you will not get any shares. In this case, we may decide at our discretion to pay you a cash bonus but it will not necessarily be equal to the value of the shares that you would have received under ShareBonus. Any cash bonus will be subject to income tax and national insurance and paid via payroll. 09 What happens if?

10 Further information If you have any more questions about ShareBonus, please call: Computershare on If you have questions on the All Employee Bonus Scheme please refer to YourHR (PeopleNet). This booklet is intended to be a general guide only. If there is any difference between the information in this booklet and the Plan Rules, the Plan Rules will prevail. A copy of the Plan Rules is available on request. We don t have to issue a prospectus in relation to this offering of shares by virtue of the exemption contained in section 1.1.2R(5) of the Prospectus Rules being an offer to existing or former employees or directors. Further information 10 Further information

11 R R Rolls-Royce plc 2016 Rolls-Royce Holdings plc Registered office: 62 Buckingham Gate, London SW1E 6AT. Company number; Registered in England. 1282KC 03