Autumn Statement 2016: Loyal workers to miss out as 'abuse' sinks shares schemeComments Off on Autumn Statement 2016: Loyal workers to miss out as 'abuse' sinks shares scheme
Companies’ most loyal employees are likely to miss out on bumper paydays when their owner sells up after the Chancellor scrapped a fledgling share incentive scheme.
He said yesterday that Employee Shareholder Status, introduced by his predecessor George Osborne in September 2013 to encourage employees to stay with a business and incentivise them, will be abolished.
An employee could be given shares worth up to £2000 — the value ascribed to the statutory employment rights, including unfair dismissal rights, they had to give up.
Income tax was paid on any value over £2000. When the individual sold the shares, any gain on shares originally costing less than £50,000 was tax-free, up to a limit of £100,000.
However, the Government claimed the scheme was being abused by companies. “The status is primarily being used for tax planning instead of supporting a more flexible workforce,” it said.
Cormac Marum of accountant Harwood Hutton said: “Companies will no longer be able to reward loyal employees.
“The risk is that business owners will give smaller payouts to their faithful right-hand man or woman — unless they address this issue long before any company sale is imminent.”