The move follows the Royal Assent given on Thursday last week to the Employee Share Scheme Act 2002, which becomes effective in the next tax year. Inland Revenue believes the relief will give a further boost to employee share ownership.
Companies will get a corporation tax deduction for money it pays to a SIP trust, which is used to buy a block of shares for transfer to employees within ten years.
‘The Act will make it easier for the future of a company to be secured by transferring ownership from individual owners to the workforce as a whole,’ explained paymaster general Dawn Primarolo.
‘The Act also makes it clear that employees may act as trustees for a Share Incentive Plan trust. This should help to ensure greater employee participation in the management and development of the Plan.’
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