Tax boost to share ownership


Tax boost to share ownership

The UK government has announced a raft of measures aimed at extending employee share ownership. In this month’s pre-Budget report, Chancellor of the Exchequer Gordon Brown unveiled a package of initiatives which included changes to the Enterprise Management Incentives, as well as plans to cut employers’ national insurance liabilities on unapproved share option schemes.

The plans are part of the government’s commitment to helping smaller high-tech companies to recruit and retain staff. The government says the measures will "boost productivity by increasing employee commitment to growth in the enterprises where they work".

Enterprise Management Incentive

The government proposes to scrap the limit on the number of employees in each business that can participate in Enterprise Management Incentive schemes. Under the old rules — the scheme has only been in place for a matter of months — only 15 key employees could benefit from these tax privileged share options.

The total value of shares that a business can issue will rise from £1.5 million to £2.5 million.

National insurance on share options

The government also announced plans to introduce legislation to limit the burden of employers’ national insurance contributions that have plagued some employee share options in the high-tech sector.

Want to know more?

Jump to the Inland Revenue’s web site . . .