The UK General Election: where do the main parties stand on remuneration and incentives?

With the UK General Election a few days away, below is a snapshot of the proposals of the main parties when it comes to remuneration, although details have been light so far. Whatever the outcome of the Election, it will be interesting to see if the new UK Government follows up on the 2023 Call for Evidence on the UK's two all-employee tax-advantaged share schemes – the Save As You Earn ("SAYE" or "Sharesave") and the Share Incentive Plan ("SIP").

Liberal Democrats

The Liberal Democrats have proposed to give employees at listed companies with more than 250 employees the right to request shares.

Whilst light on the detail, the policy would seem to suggest that employees at large companies could request that their employers implement a SIP, although it is not clear whether this would include any requirement to offer free or matching shares and, if so, in what amounts.

Labour

In 2018, Labour proposed a "revolution" in the sphere of executive pay which, under a Corbyn government, would have seen widespread changes. It will be interesting to see if any of these ideas (even if in a diluted form) will be revived under Starmer's leadership but there has been little indication of this to date.

The Shadow Chancellor, Rachel Reeves, has, however, discussed a proposal to change the way that carried interest (the profits that private equity fund managers receive) is taxed. Instead of being treated as capital gains (as is currently the case), it has been suggested that it should be taxed at the higher income tax rates. In any event, Reeves has pledged to consult on any proposed changes before implementation and has since suggested in an interview with the FT that fund managers who have 'skin in the game' and contribute their own capital to the fund could still be charged at the capital gains rates.  

For now, we will wait to see how proposals develop in this regard if, as the polls suggest, Labour wins the Election.  Our tax colleague, Casey Dalton, has been quoted in the Financial News as saying that "even if treated as income, carry could still be taxed at a preferential rate and, no doubt, those concerned about maintaining the UK's competitiveness will continue to make the case for that."

Conservatives

The Conservatives have also been silent on their plans for the future of employee share ownership schemes during the Election campaign. That said, as referenced above, the current Conservative Government has launched a number of consultations that could lead to changes once complete. This could include reforms to the tax regimes governing Employee Ownership Trusts and Employee Benefits Trusts and changes to the way SIP and SAYE share plans operate to make them more effective in the current working environment. If Labour win the election, it will be interesting to see whether they choose to continue with these consultations and, if so, whether they adopt any of the suggested reforms which come out of them.