A consultation on implementing employee owner status
Over the last few weeks, the Department for Business, Innovation and Skills has been consulting on proposals to create a new employment status called ‘employee owner’. The proposals would allow employee owners to receive shares of between £2,000 and £50,000 (which will be exempt from capital gains tax) in exchange for giving up some of their employee rights such as the right to request flexible working and training and the right to statutory redundancy pay.
LITRG has responded to this consultation with the specific interests of low-income workers in mind. We are concerned that these proposals could introduce further complexity and unnecessary burdens into the tax system. It is crucial that employees signing up to the scheme fully understand the consequences and risks of such a scheme. Although one of the benefits of the scheme is that the shares offered in the employing company will be free of capital gains tax, for many low-income workers the trade-off of certain rights will not be worthwhile because many people never use their CGT annual exemption in any event. Making the shares exempt from income tax and national insurance contributions would be a far more attractive benefit.
Contact: Kelly Sizer (please use form at http://www.litrg.org.uk/ContactUs)