Employee share schemes in CGT rate hike
1.7m face new flat rate set to be more than three times that currently paid by basic rate taxpayers
Proshare has
joined the growing ranks of organisations critical of tax changes announced in
this week’s Pre-Budget Report, expressing concern over the ‘unintended
consequences’ of capital gains tax changes.
The group, which promotes the benefits of employee share ownership, said the
1.7m employees making monthly savings through a Sharesave Save As You Earn
scheme could now face an 18% tax charge instead of a possible 5% rate.
‘While the Treasury may have sound reasons for simplifying CGT, it would
appear the consequences for employees saving through employee share plans had
not been fully assessed. These apparently unintended consequences contradict the
government’s stated commitment to encouraging long-term saving and to its
support for wider share-ownership,’ it said.
Under current rules, basic rate taxpayers who hold on to their shares for two
years benefit from a 5% rate on any CGT liability when they sell. Higher earners
currently pay 10%.