Employee share schemes at risk from CGT changes
Workers who buy shares in the company that employs them could see their tax charges rise in the aftermath of the Chancellor’s planned changes to the Capital Gains Tax regime.
The government will be introducing a flat rate CGT charge of 18 per cent on the sale of assets after 6 April.
In a recent announcement, Alistair Darling made concessions to small business owners and those employees or directors with 5 per cent or more equity in a business for which they work.
Under the concessions, entrepreneurs who sell business assets will be charged 10 per cent CGT up to a lifetime value of £1 million, while investors who sell shares will also qualify for the lower rate provided they have a minimum 5 per cent equity.
However, concerns have arisen over the tax charge that will apply to employees who invest in share ownership schemes. They will probably still face the 18 per cent flat rate charge.
Jason Hollands, of F&C Investments, said: “The replacement of the taper relief currently available to investors in companies [not listed on a stock exchange] would mean that instead of paying an anticipated 10 per cent tax rate on disposal after three years, this would soar to 18 per cent.”
He predicted that the higher rate would have an adverse effect on those owner-entrepreneurs who use share ownership schemes as a method of generating capital for their enterprises.
Tax and Financial Planning Specialist of the Year 2008
