UK workers miss out on £158 million in tax breaks by ignoring employee share plans

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UK employees will miss out on £158 million of tax breaks this year alone, by not taking advantage of employee share schemes, reveals IFA Promotion, the organisation promoting the benefits of independent financial advice.

This figure is just the tip of the iceberg, representing the amount of tax which could be saved if all 750,000 staff currently in a Profit Share Scheme invested just half the level of investment allowed under the Government's Share Incentive Plans (£1,500 each), launched in 2001.

The Share Incentive Plan, currently run by 7,796 companies in the UK, is said to be one of the most tax advantaged all-employee share schemes ever to be introduced in 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 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.

David Elms, Chief Executive of IFA Promotion, commented, "The Government's Share Incentive Plan offers generous benefits to employees investing in their own companies. Despite the Inland Revenue's attempts to raise awareness of these schemes via its UK roadshows at launch, only around 7,800 companies are running employee share schemes and a substantial amount of tax is being wasted by not taking advantage of them."

He concluded, "It may not always be appropriate for people to invest their maximum allowance in a single company's shares. But by seeking expert independent advice you will know if a Share Incentive Plan is suitable for your circumstances and could help you avoid giving the taxman more than you need to."

For a free copy of IFA Promotion's guide to tax efficiency, together with details of local independent financial advisers who can talk through your tax options in detail, call the IFA Promotion freephone consumer hotline on 0800 085 3250 or visit www.unbiased.co.uk

-ENDS-

For further information please contact:

David Elms

Chief Executive

IFA Promotion

Tel: 020 7833 3131

Liz Willder / Chloe Merriman

Lansons Communications

Tel: 020 7490 8828 / lizw@lansons.com

* Tax Freedom day is a floating date calculated every year (from 1st January) by the Adam Smith Institute: see www.taxfreedomday.co.uk for details.

** TaxAction 2004 was produced for IFA Promotion by RAKM, and is partly based on a specially commissioned analysis of Inland Revenue data combined with other sources such as the Family Resource Survey.

For expert comment or case studies from over 200 media-friendly IFAs, journalists should call IFA Promotion's Media Services hotline on 020 7294 3682 or search online in 'Media Services' at www.unbiased.co.uk

1. Independent Financial Adviser Promotion

IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents over 10,000 firms of independent financial advisers across the UK and is sponsored by 27 leading financial institutions. In 2003, over 330,000 consumers and businesses used IFA Promotion to find local independent financial advice.

IFA Promotion believes 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.

2. Independent Financial Adviser Promotion's sponsors

Abbey

Mortgage Express

AXA

National Savings & Investments

Bright Grey

Norwich Union Life

BUPA

Old Mutual Asset Managers

Canada Life

Prudential

Children's Mutual

Scottish Equitable Plc

Clerical Medical Investment Group

Scottish Life

Eagle Star

Scottish Mutual Assurance Plc

Friends Provident

Scottish Widows Plc

GE Life

Selestia

GMAC Residential Funding

Standard Life Assurance Company

INVESCO Fund Managers Ltd

Skandia UK Group

Legal & General

Zurich Life Assurance Company

London Mortgage Company

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UK workers miss out on £158 million in tax breaks by ignoring employee share plans

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