Money News
While the small business community will have been grabbing the headlines after determining that changes to the CGT regime will seriously impact the sector, another group likely to be critical of the Government's measures will be the more than 270,000 Save As You Earn (SAYE) employee shareholders across the country.
Indeed, ifsProShare - the employee share ownership lobbying body - says that while the current CGT regime means that basic rate taxpayers who have held shares in their employer for at least 2 years are only subject to a 5% CGT charge, the Chancellor's confirmed changes mean that these employee shareholders will have to pay an additional 13% tax on any gain above £9,200 from April 2008.
This means employees who have contributed to the success of their employers are now going to be worse off than under existing legislation whilst non-employee shareholders who've not done so are to have their CGT liabilities substantially reduced (from 40% to 18%).
The changes are also likely to have some impact on medium and long term saving through employee share ownership, damaging moves towards wider share ownership as a means of saving for the future.
Fiona Downes, Head of Employee Share Ownership at ifs ProShare, said: "Having informed the Chancellor of the fact more than 270,000 employees could be worse off following his proposals, we are naturally disappointed that this evidence appears to have been ignored."
Downes adds that as well as there being no changes to mitigate the effects on employee shareholders, the uncertainty and repeated delays in confirming this decision mean many employee shareholders will have to make relatively quick decisions about whether or not to sell or hold some of their shares. SAYE participants should speak to their employer about the range of choices available to them or seek financial advice.
25 January 2008 © Moneyextra.com
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