What now for Employee Share Schemes?
The Chancellor announced in his Autumn Statement that from 1 December 2016 he will abolish the tax advantages of Employee Shareholder Status.
Introduced in September 2013 as part of Vince Cable’s drive to increase Employee Ownership in UK businesses, the Government has found that the take up for the scheme has been low, and that those who have chosen to offer the status to employees have been largely motivated by the tax advantages, rather than the recruitment, motivation and retention of staff that the Coalition had trumpeted as the driver for introducing tax breaks to encourage uptake of the model. The tax advantages were limited in the Budget earlier this year, but have now been removed all together.
The changes will not affect those schemes already up and running, but those businesses which were considering offering the status to employees will need to consider other options, such as more traditional EMI schemes.