Equity for all in next year’s Budget

Small design businesses and Internet start-ups could receive increased tax breaks on employee share option schemes, if proposals go ahead in the Government’s Budget next Spring. The aim is to make it easier to recruit new staff and retain existing employees.

Under the new proposals, small businesses – companies with no more than £15m turnover – will be able to offer share options to all employees rather than a select few. Encouraging staff to take a stake in their company will “boost productivity by increasing employee commitment to growth”, says the pre-Budget report.

At present, 15 key employees can qualify for shares worth up to £100 000. Under the new scheme, any employee can be granted share options, up to the value of £2.5m. This includes part-time employees, such as freelances, who were previously excluded.

It follows the Chancellor’s pre-Budget report last Wednesday, prior to which design industry experts called on Gordon Brown to incentivise companies investing in design and development. The Inland Revenue is consulting on what changes are needed, and details are likely to be announced in the 2001 Budget.

Simon Rhind-Tutt, The Tutt Consultancy managing director, says anything that helps consultancies hold on to staff should be welcomed. “The recruitment problem is spiralling out of control. Digital media consultancies have lured traditional designers, who see the area as more lucrative, but even these companies are finding it difficult to recruit. The challenge is to lock staff in. This sort of offer will help but hard cash, in the form of bonuses, is often more motivating,” he says.