Although there are a number of firms who offer some form of employee share plan, the number of schemes being opened each year is small, with critics suggesting that part of the reason for this is because the incentives for employee schemes are inadequate.
In addition an investigation, by the Office for Tax Simplification, into the application process businesses must go through to set up an employee share scheme, found the approval process with HMRC caused multiple problems.
John Whiting, the tax director for the Office of Tax Simplification added that although the schemes were if real benefit to employers, the current system was putting companies off due to heavy paperwork and lengthy delays.
He went on to say: “We spent a lot of time looking at the benefits of schemes, asking if they are worth the tax benefits on offer and the evidence we received was yes, they are.
“It’s about more than motivation, its identity. If employees have shares in their company they may not be glued to the share price, but they will identify more closely with the company and its fortunes.”
Following their investigation, the Office for Tax Simplification have suggested that rather than make companies wait for HMRC to approve schemes, they should be self-certified which would cut the time required to set up a share plan.
For more information, please visit www.milsted-langdon.co.uk
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