Shares-for-rights scheme could cost One Billion a year
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The Office for Budget Responsibility has warned that the
government’s controversial shares for rights scheme will cost the
taxpayer £1bn in list revenues a year by 2020, as well as opening a tax
loophole.The prediction was made in the Treasury’s policy costings
document alongside the Autumn statement. Designed to encourage
businesses to take on staff, the shares for rights idea was budgeted to
cost the state just £20m in 2016/17 and £80m in 2017/18 which is the
end of the forecast period.
Of the £1bn predicted, as much as £250m of the cost could be due to tax
avoidance or ‘planning’. The OBR said: “It is hard to predict how
quickly the increased scope for tax planning will be exploited... this
could be quantitatively significant as a quarter of the costing already
arises from tax planning.”
Tax ‘planning’ could involve company owners awarding themselves the
shares or making side agreements with staff that protect their rights.
Under the shares-for-rights proposals, new employees would be
exempt from unfair dismissal rights, redundancy pay and the right to
request flexible working. Maternity rights would also be restricted.
They would in turn receive shares in the company of a value between
£2,000 and £50,000 on which they would not have to pay capital gains
tax. The OBR has said it expects the take-up to largely be from people
in existing employee share schemes transferring over to the new scheme.
For more information on your rights at work please contact employment
law specialists Ashley Hunt, Carrie-Ann Randall or Vanessa
Crookes at Lawson-West on 0116 212 1000.
About the Author
Lawson-West specialise in commercial, business and employment law. Our team
of dedicated commercial solicitors can help with buying or selling a business,
business law and disputes, landlord and tenant issues and commercial property.
Our expert employment team can offer practical advice and guidance on all
aspects of employment law including redundancy, compromise agreements and
dismissal procedures. Visit
www.lawson-west.co.uk for more information.
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Article Published/Sorted/Amended on Scopulus 2013-02-12 14:39:35 in Legal Articles