There is much discussion this morning on Osborne's new share scheme by which employees can be issued with between £2,000 and £50,000 shares in the companies they are employed with if they give up their employment rights.
One thought as an accountant: are these shares, or options?
If they're shares as he says - who is paying for them? Not the employee, I'm sure. If not, then the employer must. But they won't have the capital to do so. So will they be allowed to charge the profit and loss account and credit the share capital account? And will they get tax relief on the cost inn that case? But this is going to make their businesses look unprofitable which won;t help borrowing. Are they going to want that?
Or are these really options? In which case - has George been telling people they'll get shares when he's offering no such thing? That's a failed promise in that case.
Either way, the more I look at this the more bizarre it gets.
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This is all a Neo-con trick. Clegg was singing the praises of a John Lewis style economy aprroximately eight months ago. http://www.guardian.co.uk/politics/2012/jan/16/nick-clegg-unveils-plans-john-lewis-economy
This is Gideon’s nasty version, which is probably not the one Clegg had been mind!
Perhaps the employees will be required to take out a loan to acquire the shares as a condition of their employment? I wonder who will provide the loans?
I am glad you are looking into this because it is fairly clear this is a plan to take away workers rights by giving them meaningless paper promises.
My main concern is these capital gains tax free shares will be used by the well off when they create shell companies to avoid other taxes. What would stop a company hiring its own originating shareholders for some minor amount of time say half an hour a week and awarding them £50,000 worth of capital gain tax free shares? If the shares are paid for out of the share premium account, so that a 1p with a share’s paid-up value is £1 would mean 99 CGT free shares can be issued. This would open up a massive avoidance of Capital Gains Tax.
Entirely agreed
If that’s possible then this is a scam
As if the legislation on employee shares wasn’t complex enough already! I am losing the will to live!
How many small businessmen want to give away ownership of their business? I think George will find they would rather give the employment rights.
Frankly, I think this is all rubbish that will be kicked into the long grass as soon as anyone starts to look at the practicalities. But Tory conference will love the idea of taking away the rights of the “******* plebs”!
James!
You must be angry
And quite right too
Yet another example of Osbone’s inability to think through the consequences of a solution to a problem that probably doesn’t exist. Businesses are scared to recruit because of the potential cost of redundancy or unfair dismissal, nonsense. They can already hire people on a fixed short term contract for up to a year that can be terminated at the end of a probationary period. After a year if the employee is stil required and the business thinks the worker is right for the Job, the contract becomes permanent. Statutory redundancy for a 25-41 year old is a weeks pay (up to £430/week) per years service, hardly a deterrent to employing somebody. If you can’t run a business under those terms you aren’t the employer that we should be encouraging.
Will the employee receive the shares tax free? Can you resign at any point and sell your shares? How are share values calculated for companies that are not traded on a stock exchange? if this goes anywhere it will become another means of avoiding tax for the higher paid.
The u turn on charitable giving told us that George really doesn’t understand how the world works. This has shown us that he hasn’t learnt from the fiasco, another blind move to de-regulation for the sake of de-regulation sold as a solution to a non existent problem. Do us all a favour George before you ruin everything and take your mate Dave with you.
Osborne has never been in the real world…
You show you have
And I thought gimmicks like this disappeared when Gordon Brown left office. There must be some people in the Treasury who are employed solely to dream up stuff like this. The bicycle scheme, the zero corporation tax rate (only companies need apply) etc etc.