- Firms call for five year ‘holding period’ on tax breaks to be cut to two
Major companies including Vodafone and Diageo have called for Rachel Reeves to make it easier for staff to own shares in their employer in the upcoming Autumn Budget.
Employee share incentive plans offer employees the opportunity to invest in the company they work for, often offering shares at a discount to market value, and giving workers a stake in their employer.
More than 50 firms including the likes of Wickes, Experian and Pearson have urged the Chancellor to make changes that would make it simpler for workers to access the investment schemes.
It comes as the Government pushes savers to invest some of their cash instead in a bid to boost the flagging economy. Part of this plan reportedly includes reducing the cash Isa threshold from £20,000 to £12,000 in the Budget tomorrow.
The 50 companies called for a reduction in the mandatory holding period on employee share incentive plans to be cut from five to two years.
Currently, scheme participants must hold shares for five years in order to benefit from tax incentives, which include not paying income tax or National Insurance on them.
Slice of the pie: Introduced in 2000, share incentive schemes allow employees to benefit from tax relief on their shares, and gives them a stake in the success of the company they work for
The firms said the current five-year holding period is a barrier to wider participation in these investing schemes among employees, and that millions more would participate if the limit was cut.
> Read more: The best stocks and shares Isas
More than a million people each year invest in tax-benefit schemes, either through share incentive plans or save as you earn schemes with their employer.
The Government says it wants to create a ‘culture’ of investing in the UK.
Kirsteen Sullivan, MP for Bathgate and Linlithgow, said: ‘With the Government’s ambitious agenda to support staff, back British business and encourage share investment, modernising employee share ownership plans has an essential role to play.’
The Government will set out its spending and tax plans on Wednesday in the Autumn Budget, with considerable speculation that this will include measures aimed at increasing investing among the UK public.
Sophie Altaf, head of lobby group ProShare which helped coordinate the letter said: ‘In her Mansion House speech, the Chancellor made it clear that she wants to see an increase in ordinary, often first-time, investors in the stock market.
‘Greater investment in employee share ownership plans would help achieve this.
‘By reducing the holding period, the Chancellor can help unlock share ownership for many more working people, connect them more closely with their employers, and give British businesses a vital new tool for attracting and retaining top talent.’
She added that it could ‘boost financial inclusion, transform saving habits, and create a workforce truly invested in the UK’s economy.’
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