Autumn Statement 2012: Controversial 'shares for rights' scheme to go ahead

Posted by Dan Martin in Staff, Regulation on Wed, 05/12/2012 - 14:55
staff only sign

The government's controversial initiative which allows companies to offer shares to employees in return for them giving up certain employment rights will go ahead, the chancellor has confirmed.

Although a very brief reference in George Osborne's Autumn Statement speech in the House of Commons, the full document released by the Treasury confirms that the so-called 'shares for rights' scheme will come into force.

The news is despite reports that among the 209 business and employee groups that responsed to a consultation over the idea, only five outrightly backed it. 

Speaking to BusinessZone.co.uk, Sarah Lafferty, founder of Round Earth Consulting, said: "My instant reaction to this is that it seems like too much complexity, ambiguity and red tape in return for marginal (if any) gains to me as a small business employer. 

"I also don't see how this is going to be an attractive proposition for the average employee who I would be looking to hire, most of whom are not in a position to 'invest' in a company and just want to get paid so they can survive and pay off debts. 

I'm afraid it strikes me as a little out of touch with reality. If this is all the chancellor has come up with to stimulate small business growth in the Autumn Statement, I remain disappointed."

The full text from the Autumn Statement report:

"The government is legislating to introduce a new employee shareholder status that will give staff a stake in their firms' future success and give firms greater choice about the contracts they can offer to individuals. Employee shareholders will have different employee rights and shares worth a minimum of £2,000 in the firm they work for.
 
"As announced, the government will exempt gains on up to £50,000 of shares acquired by employee shareholders from capital gains tax from 6 April 2013.
 
"The government is also considering options to reduce income tax and National Insurance contributions (NICs) liabilities that arise when employee shareholders receive their shares, including an option to deem that employee shareholders have paid £2,000 for shares they receive.
 
"This option would mean that the first £2,000 of shares received under the new status would be free from income tax and NICs."

 

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