The Government's profit-related pay initiative: three years on

Robert Luther

Fiscal Studies, 1991, vol. 12, issue 3, 62-72

Abstract: Three years have elapsed since Profit-related Pay (PRP) was introduced and it is of interest to review what was heralded as an exciting and ambitious initiative. The Government clearly wishes PRP to 'catch on' and the 1991 Budget provides that bonuses paid under the scheme are now completely exempt from tax. Profit-sharing, broadly defined, has been strongly advocated and is widely practised. A survey by Baddon et al. (1987) indicated that 65 per cent of establishments in the private sector operate some form of employee financial participation scheme. In view of this and the tax relief available, it is puzzling that the number of PRP schemes that have been registered is far below the expectations of its protagonists.

Date: 1991
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