By Simon London

Gordon Brown stepped up his campaign to encourage employee share ownership with measures aimed at those working for small, high-tech companies.

The moves underline his desire to create an enterprise economy modelled on the US, where higher rates of economic growth have been attributed in part to a culture of equity investment.

The chancellor said "the lowest corporate tax rates for businesses ever and lowest ever capital gains tax rates for long-term investors" would encourage entrepreneurs to choose Britain as a base. Tuesday's package makes it possible for investors to benefit from accelerated relief from capital gains tax (CGT) when they invest in their employer's shares. The relief will also apply to all long-term investment in unquoted companies.

This should make it more attractive for employees of small, high-growth companies, where capital gains can be spectacular, to take an equity stake in the company for which they work.

Tax experts and small business groups welcomed the measures. "This is terrific news," said Fred Hackworth, director of the Employee Share Ownership Centre.

The reform of CGT follows the announcement of two employee share ownership initiatives in last year's Budget. A new tax-advantaged option scheme, known as the Enterprise Management Incentive (EMI), aimed at high-flyers in small, unquoted companies, comes into effect from next month. Tuesday's reform will increase its attractiveness.

"The EMI now looks like the best shelter in the whole British tax system," said David Cohen at solicitors Norton Rose.

Also coming into effect from April is a new all-employee share scheme, under which investors can acquire shares in the company for which they work up to a maximum of £7,500 each year. It will be possible to sell these shares after four years and face a maximum tax bill of only 10 per cent.

Employees who have accumulated large shareholdings under the existing Save As You Earn scheme, which has been running since 1980, will also pay less tax.

Simon Philip, partner at Arthur Andersen, the accountancy firm, said: "I've come across an increasing number of people who have not been paid spectacular salaries but are sitting on six-figure wealth deriving solely from loyally contributing to SAYE. Now they will be able to exit at a far lower tax cost."

The chancellor announced that the SAYE scheme, popular with large employers, would continue to operate.

RELATED ARTICLES
SHARES: Experts welcome reprieve for SAYE
INCENTIVES: Private investors get £600m
WOMEN: VAT on sanitary protection to be cut to 5%
TAX BILLS: Taxpayers may use debit cards
Philip Stevens - Searching for the e-society