Workers in share-owning schemes set to lose tax breaks
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Your support makes all the difference.Over a quarter of a million workers could be worse off due to the Chancellor's decision to reform capital gains tax (CGT), ifs ProShare, the not-for-profit organisation that promotes employee share ownership, has warned.
From April, CGT will be charged at a flat rate of 18 per cent, down from the current level of 40 per cent. A series of reliefs are, however, being scrapped as part of the reform. Among these is a tax break that allows employees who have held shares in their own firm for longer than two years – via an authorised Save As You Earn (SAYE) scheme – to pay CGT at just 5 per cent. In effect, this means that, from the next tax year, when SAYE scheme members come to sell their shares they will be paying 13 per cent more tax on any profits made, above their annual CGT threshold.
"When the Chancellor first announced these changes [in the pre-Budget report], we made it clear that a significant minority of SAYE participants would be affected," said Fiona Downes, head of employee share ownership at ifs ProShare. "If the Government wishes to continue encouraging medium- and long-term saving through employee share ownership, then action is needed to address this."
Ifs ProShare told Treasury officials of its disquiet in a meeting last Thursday. The organisation is calling for SAYE schemes to be exempt from the new CGT flat-rate regime.
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