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Employee shareholder scheme announcement in the Budget

20 March 2013
London Employment partner Bernadette Daley comments on George Osborne’s plans to implement employee shareholder schemes as announced in the Budget today:

“Today’s announcement on employee shareholder scheme has so far been met with scepticism. At best, the proposed employee shareholder status might be used by start-ups and small businesses that look to take advantage of the exemption from capital gains tax. However, these benefits could be offset by the problems caused by determining the value of the shares and the administrative burden in drawing up contractual arrangements to deal with buy back of shares in the event an employee leaves.

But the scheme would not cover the public sector, partnerships, charities and other bodies that are not companies. This automatically rules out a large swathe of employers. It is conceivable that larger companies and multinationals listed on stock exchanges could offer this to new hires on a take it or leave it basis, using any existing share incentive schemes. Given the potential problems of the scheme and what appears to be a widespread lack of enthusiasm amongst employers, you may want to question why is the Government pushing forward with these proposals? A number of questions remain around the operation of the proposed employee shareholder scheme and the Government has stated that it will address any outstanding issues by issuing clear guidance on the new scheme. Until the bill has been finalised and guidance published, the jury will still be out on the true impact that the new status will have on both employers and employees.”

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