Schedule 13 - Employee share ownership plans: amendments
Finance Bill
11:30 am
Mr Howard Flight (Arundel and South Downs, Conservative)
Thank you, Mr O'Hara, for accommodating the starred amendment to amendment No. 14. Amendment No. 15 picks up another part of the employee share ownership rules in the schedule that we feel could be improved, and reflects practical experience.
At present, awards of partnership shares can be made to employees under which they can purchase shares at market value from their pre-tax salary. That is usually done by means of what is known as an accumulation period, during which monthly deductions from payroll are contributed during 12 months into a fund that accumulates to buy the shares. We suggest a little more flexibility about such accumulation periods. It is possible to exclude anyone who has not served a minimum service period, but if that period is completed after the start of the accumulation period, such employees will be excluded from the award until the next year.
Equally, employees who are eligible at the start must make an immediate decision about whether or not to join. They cannot change their minds part way through—for example, once they are more certain about their financial position and ability to subscribe. However, people who sign up at the start can change their minds and reduce their contributions during the accumulation period. The net result of that is a little unfair, and causes practical difficulties. Would not it be simpler—as the amendment would allow—to let such people catch up during the year and offer them fewer shares to reflect the proportion of the accumulation period for which they participated?