In his March 1999 Budget the Chancellor of the Exchequer Gordon Brown announced a new all-employee share scheme to be introduced in 2000. This scheme will for the first time allow employees to allocate part of their pre-tax salary to buy shares in their employer's company without paying income tax or National Insurance Contributions (NICs) on those shares. If the shares are held for three years, the employee will be subject to income tax on the amount of salary allocated to those shares when they are taken out of the scheme, but the longer the shares are held in the scheme the lower the proportion of the salary that will normally be subject to tax.
Employees will also be able to receive free shares and employers will have more flexibility in providing free shares, including matching the shares bought by employees. Shares given to employees will be free of income tax and NICs if they are kept in the scheme for three years. Any gains arising on either free or bought shares while they are in the scheme will be completely tax free.
Employee Ownership Options has been set up with the assistance of the EU ADAPT programme to provide information on how employee ownership can bring benefits to employees, business owners and trade unionists.