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Staff missing out on tax-free share schemes

Workers will miss out on 285m of tax breaks this year in employee share schemes, says IFA Promotion.

The figure represents the amount of tax which could be saved if each of the estimate 865,000 currently in a savings related share option scheme invested just half the 1,500 investment permitted under the Government’s share incentive plans.

Only 435 UK companies run the share incentive plan, which offers some of the best tax advantages ever to be introduced in the UK.

The schemes permit staff to get up to 3,000 worth of shares a year and to buy up to 1,500 of partnership shares from their pre-tax salaries, free of tax and National Insurance contributions.

Employers can give up to two free matching shares for each partnership share that an employee buys.

Employees who sell their shares after three to five years pay income tax and National insurance contributions on the initial value of the shares but people who keep them for five years pay no income tax or NICs on gains.

IFA Promotion chief executive David Elms says: “A subs- tantial amount of tax is being wasted by failing to take adv- antage of employee share schemes but, by seeking exp- ert independent advice, you will know if a share incen- tive plan is suitable for your circumstances.”

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Neil Jones is technical support manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. The residential nil-rate band (RNRB) was first announced in […]

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