Autumn Statement 2016: Loyal workers to miss out as 'abuse' sinks shares scheme

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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.”

Source Article from http://www.standard.co.uk/business/autumn-statement-2016-loyal-workers-to-miss-out-as-abuse-sinks-shares-scheme-a3404026.html

November 25, 2016 |
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