UK Workers Ignore Employee Share Schemes and Miss Out On 171 Million in Tax Breaks
For Immediate Release: 22nd October 2007
- Visit www.taketaxaction.co.uk or call 0800 085 3250 to find a local IFA to help you sort out your finances -
UK employees will miss out on a staggering 171 million of tax breaks this year, by failing to utilising the most tax-efficient employee share schemes*, reveals Unbiased.co.uk, the website promoting the benefits of independent financial advice.
There are currently 8,608 companies running a tax-advantaged employee share scheme; of these only 551 are Share Incentive Plans, which give employees returns free of income tax and National Insurance Contributions.
If the 570,000 staff currently in another type of savings related share option scheme invested just 1,500 each in a Share Incentive Plan (half of the maximum investment) the total tax saved would amount to 171million.
David Elms, Chief Executive of Unbiased.co.uk, commented, “Share Incentive Plans are a fantastically tax-efficient way of keeping your money safe from the taxman. An independent financial adviser can help you decide whether a Share Incentive Plan is suitable for your circumstances and can give you advice based on 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 or by calling 0800 085 3250.
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*Source: HMRC/RAKM for Unbiased.co.uk. If the half of the level of investment allowed under the Share Incentive Plan (1,500) was made for/by the estimated 570,000 staff currently in savings related share option schemes a tax cost of 171 million would be accrued.
Please note that following the recent Pre-Budget Report, the whole issue of Share Schemes is being reviewed and there will be changes in the near future.
For further information please contact:
David Elms | Anna Schirmer/Jonathon Grove |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3682 |
020 7833 3131 |
|
For expert comment or case studies from over 200 media-friendly IFAs, journalists should call unbiased.co.uk’s Media Services hotline on
020 7294 3682 or search online at www.unbiased.co.uk/media
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Unbiased.co.uk is the consumer brand of IFA Promotion, the organisation established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the UK, incorporating over 17,000 registered individuals. These individuals hold over 20,000 incremental qualifications which are each individually verified by the awarding body. IFA Promotion welcomes the prominent display of incremental qualifications and further developments into the credentials of independent financial advice.
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