Ignoring share plans costs employees £207m

British workers are missing out on £207 million in tax breaks because they are not signed up to the right employee share scheme, new figures show.

IFA Promotion points out that while 600,000 Britons are in a work-based share option scheme, most are not taking full advantage of the government's share incentive plan.

This is despite the fact it is one of the most tax advantaged all-employee share schemes there has ever been in the UK.

"We all wish we paid a little less to the taxman and had a little more money in our wallets, yet a substantial amount of tax is being wasted by failing to take advantage of employee share schemes," said IFA Promotion chief executive David Elms.

The government scheme is only being used by 467 companies in the UK, but there are some 6,427 UK firms that are currently offering a tax-advantaged employee share schemes.

If people on company share schemes filled just half their allowance under the share incentive plan, they could save more than £300 each on average - with combined savings of over £207 million.

The government's share incentive plan, launched in 2001, allows employers to give their staff up to £3,000 worth of shares a year, free of tax and national insurance.

Employees can also buy up to £1,500 of 'partnership shares' from their pre-tax monthly salary or weekly wages, and they come free of tax and national insurance. Employers can also offer employees two free 'matching shares' for each partnership share the employees buy.

Additionally, if people keep their shares in the scheme for five years they pay no income tax or national insurance on profits made when the shares are sold. Employees who take their shares out of the scheme after three years only pay income tax and national insurance on the initial value of the shares.