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By ignoring employee share schemes UK workers miss out on 184 million in tax breaks

- Visit www.taketaxaction.co.uk to find a local IFA to help you sort out your finances

UK employees will miss out on a staggering 184 million of tax breaks this year, by failing to utilise the most tax-efficient employee share schemes*, reveals Unbiased.co.uk, the website promoting the benefits of independent financial advice.

There are currently 9,570 companies running a tax-advantaged employee share scheme and of these 760 are New Share Incentive Schemes, which give employees returns free of income tax and National Insurance.

If the 560,000 staff currently in another type of savings related share option scheme invested just 1,500 each in a Share Incentive Scheme (just half of the maximum investment) the total tax saved would amount to 184 million.

David Elms, Chief Executive of Unbiased.co.uk, commented,

"Share Incentive Schemes are a fantastically efficient way of keeping your money safe from the taxman, and with more and more companies now offering them, workers should make sure they are making the most of this tax saving option. As there are many different options available, we suggest you see an independent financial adviser to help you decide whether a Share Incentive Scheme is suitable for your circumstances. An IFA can give you the best advice based across all available savings products on the market."

The New Share Incentive Scheme, launched in 2001, is described by the HMRC as "the most tax-advantaged all employee share scheme ever introduced into the UK". The main features of this scheme are:

• Employers can give up to 3,000 worth of "free shares" a year to employees free of tax and national insurance.
• Employees can buy up to 1,500 of "partnership shares" from their pre-tax monthly salary or weekly wages, free of 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 National Insurance Contributions 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 on no more than the initial value of the shares. Any increase in value recorded while the shares where held in the plan will be free of income tax and NIC liability. As will be any dividends reinvested in more plan shares, provided those shares are held for at least 3 years.

For more information on self-assessment and avoiding tax waste, visit IFA Promotion’s dedicated website at www.taketaxaction.co.uk. The site contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax. You can also find details of local IFAs on the site.

-ends-

* Source: HMRC/RAKM for Unbiased.co.uk. If half of the maximum level of investment allowed under a Share Incentive Plan (1,500) was invested by the 560,000 staff currently in savings related share option schemes, a tax saving of 184 million would be made.

Tax doesn’t have to be taxing – Here are 10 basic ways** to claw back some of the waste:

• IF YOU HAVE ASSETS OVER 312,000: Plan your inheritance - an extra 1.9 billion could go to chosen heirsby planning properly to avoid IHT liabilities. IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.


• IF YOU SAVE: Use up your annual ISA allowance - 263 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a Friendly Society savings account or products from National Savings & Investments as tax-efficient savings options.


• IF YOU ARE ELIGIBLE: Claim your tax credits - 3.7 billion of ‘free money’ is up for grabs from HMRC and the DWP, in the form of Pension Credits, Child Tax Credits and Working Family Tax credits.


• IF YOU FILL IN A TAX RETURN: Sort out your self-assessment - 479 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of 100; further penalties and errors make up the balance of tax wasted in this way.


• ALL TAXPAYERS: Maximise your personal tax allowances - 474 million goes begging each year, 330 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further 144 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.


• IF YOU SAVE: Top up your pension pot - 726 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.


• IF YOUR EMPLOYER OFFERS AN EMPLOYEE SHARE PLAN: Take advantage of it - 184 million is up for grabs for the estimated 600,000 staff currently in Profit Related Pay schemes.


• IF YOU HAVE CAPITAL GAINS: Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your CGT allowances - 264 million could be saved in this way.


• IF YOU GIVE TO CHARITY: 936 million more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.


• IF YOUR CHILD OR GRANDCHILD IS ELIGIBLE FOR A CHILD TRUST FUND: Avoid waste by using up the tax free saving potential - 242 million in tax could be saved in their first year of existence.

For further information please contact:

For expert comment or case studies from over 200 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook to search online or call Unbiased.co.uk’s Media Services hotline on 020 7294 3682.

1. Unbiased.co.uk

Unbiased.co.uk is a not for profit organisation which promotes the benefits of Independent Financial Advice to UK consumers.

Unbiased.co.uk, which is in its 19th year, creates over 6,000 pieces of positive coverage in the consumer media each year, highlighting the importance of seeking independent financial advice across online, broadcast and print media. This positive media generation influences consumers’ behaviour and increases their awareness of the benefits of seeing an IFA.

Unbiased.co.uk is the online gateway between consumers researching their financial advice options and IFAs. Over 60 white label versions of Unbiased.co.uk’s confidential ‘Find an IFA’ service are now running on partner websites including those of media and portal money channels, product provider sponsors and other industry bodies.

Over the past 12 months, over 575,000 consumers have used Unbiased.co.uk’s ‘Find an IFA search’, or one of the white labels, to find a local IFA – and 94% of these enquiries were dealt with online.

When searching for a ‘Find an IFA’ on UK Google, around 80% of the returned links over the first five pages of search results now display either Unbiased.co.uk directly or a white label version of Unbiased.co.uk’s ‘Find an IFA’ service running on a partner website. To support this activity Unbiased.co.uk now regularly provides white label versions of its consumer guides, tools, microsites and podcasts to partner personal finance websites.

2. Unbiased.co.uk’s product provider sponsors

Abbey for Intermediaries	Lincoln Financial Group
Aberdeen Asset Management	Lockton
AEGON Scottish Equitable Plc	Lutine Assurance Services
Alliance Trust	MetLife
AXA Life	National Savings & Investments
Bright Grey	New Star Investment Funds
BPP	Norwich Union Life
Canada Life Ltd	Prudential
Cardif Pinnacle	Scottish Life
The Children’s Mutual	Scottish Life International
Clerical Medical Investment	Scottish Widows Plc
Defaqto	Skandia UK Group
Friends Provident	Standard Life Assurance Company
The Hartford	Tomorrow
Invesco Perpetual	Unum
Legal & General	Zurich Intermediary Group

Registered Office: Unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606

Lisa Grando
Lansons Communications
24a St John Street, London, EC1M 4AY

Direct +44 (0)20 7294 3669

Email LisaG@lansons.com
Web www.lansons.com

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