Hunt plans biggest shake-up of employee ownership schemes in 23 years
Government aims to make it easier for workers to own shares in companies they work for
A recent article shared by The Daily Telegraph discussed what is described as the “biggest shake-up” in employee ownership scheme history. As the government take steps to boost the economy, Chancellor Jeremy Hunt hopes to increase participation in Save as You Earn (SAYE) and the Share Incentive Plan (SIP), the UK’s all-employee tax advantaged share schemes.
The schemes enable employees to buy shares in their company, with the SAYE allowing employees to buy discounted shares if they save money each month for three to five years, while the SIP scheme enables the employer to sell shares directly to its employees, or offer them as awards, tax free (subject to a cap).
Currently, there are concerns around the ease of implementation for businesses, as nearly a third of companies that were unaware of either scheme said they were too complicated to set up (HM Revenue & Customs). However, employers can reap the benefits of implementing the schemes; financial secretary to the Treasury, Victoria Atkins said: “Employee share schemes are an effective way to boost motivation in workforces by giving people an extra stake in what they do – and they offer a boost for business.” Ms Atkins’ statement is supported by both government research that revealed the potential for a 3.5% increase in worker productivity when a scheme is in place and analysis by HM Revenue & Customs that shows that 81% of employers who use the schemes found they helped boost businesses.
David Mortimer of Proshare, a lobby group who have called for a reduction in the holding period of shares, said: “Five years is a very long time, particularly if you’re in your 20s. A good employee is penalised by their ambition if they want to move on [before the end of the five-year period].”
The call for evidence, which was first announced in the Chancellor’s Spring Budget, is underway, with the aim of gathering businesses’ views on how to improve and simplify the schemes. The Government has a particular interest in increasing participation amongst low earners. Tax Director, Steve Lawrey of Wilson Partners commented on the shake-up stating, “This is really good news for businesses keen to tie in and reward key members of their team and hopefully marks the beginning of some wider changes for SMEs as well”.
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