UK wastes 312 million by not using employee share plans
See an IFA to ensure your staff get their fair shares - Call IFA Promotion's business hotline on 0800 085 3251 or visit www.unbiased.co.uk for details of local independent advice
UK employees will miss out on 312 million of tax breaks this year alone, by not taking advantage of All-Employee Share Plans, reveals IFA Promotion, continuing its 'war on wasted tax'*.
This figure is only the tip of the iceberg, representing the amount of tax, which could be saved if UK companies made it possible for all existing members of Profit Share Schemes were to invest through the Government's new All-Employee Share Plans (AESOPs), introduced in July 2000 and offering a range of tax-efficient advantages over former schemes.
The main features of AESOPs are:
- Employers can give up to 3,000 worth of "free shares" a year to employees free of tax and national insurance in any one tax year.
- Each Year Employees can buy up to 1,500 of "partnership shares" from their Gross salary or wages, reducing their tax and National Insurance Contribution liability.
- Employers can give employees up to two free "matching shares" for each partnership share the employees buy.
- Employees who keep their shares in the scheme plan for five years pay no income tax or NIC on profits made on their sale.
- Employees who take their shares out of the scheme plan after three years will pay income tax and NIC only on the initial value of the shares (or the market value if it is lower than the initial value at the time of sale).
AESOPs are the successors to Profit Related Pay schemes, which were stripped of their valuable tax breaks at the end of 1999. If two thirds of those companies that formerly provided PRP schemes (7,489 schemes with an estimated 2.4 million staff) could provide the new All-Employee Share Plans and just half the maximum annual limit was invested into the plans (1,500 each), the taxman would be out of pocket to the tune of 312 million.
David Elms of IFA Promotion said, "AESOPs offer generous tax perks to employees investing in their own companies, and we've been able to quantify, albeit conservatively, the level of tax which could be spared by taking advantage of them. Companies currently offering another type of scheme should consult an independent financial adviser to see if the value of benefits on offer to their employees could be improved at no extra cost to themselves."
For details of local independent financial advisers who can advise businesses on employee benefits, call the IFA Promotion business hotline on 0800 085 3251 or visit www.unbiased.co.uk
* Wasted Tax 2001, conducted for IFA Promotion by independent research agency RAKM. Call researcher, Paul Hersey, for more information - 01737 773 497.
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| David Elms Chief Executive IFA Promotion 020 7833 3131/ 07803 603 659 david@ifap.org.uk | or | Richard Winder / Pippa Russell Lansons Communications 020 7490 8828 |
Notes to Editors
1. Independent Financial Adviser Promotion
Independent Financial Adviser Promotion Ltd was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents over 9,000 registered individual independent financial advisers across the UK and is sponsored by 31 leading financial institutions.
IFA Promotion's central belief is:
"Consumers have a right to financial advice that is independent of the providers of financial products - i.e. independent financial advice."
Furthermore independent financial advice should be:
- Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
- Convenient. IFAs should be available in the location of the consumer's choice, wherever they live in the UK.
- Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
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