• Employee shareholders will no longer always have to consider whether the company where they work is trading. As a result, many companies, in particular listed companies, will no longer have to address this question on behalf of their employees;
  
• Employees, including part-time employees, of the company in which they hold shares (or of any company in the group) will qualify;
  
• The new definition of business assets will apply to disposals on or after 6 April 2000, and to periods of ownership from 6 April 2000, thus coinciding with the changes announced in Budget 2000. Where shares qualify as business assets only from that date, an apportionment of the eventual gain will be necessary so that part qualifies for business asset taper and the balance for non-business asset taper. The apportionment will be carried out under existing rules.

However, the Treasury is concerned that people may take advantage of the new rules by 'securitising' their personal assets in companies where they are employees or directors. There will be consultation on rules to avoid this possibility. Comments on the proposal generally, the rules to prevent exploitation and the extent of the compliance cost savings are invited by 13 December 2000 and should be sent to mal.thomas@ir.gsi.gov.uk

The Enterprise Management Scheme, which currently allows certain types of company to grant tax-privileged share options worth up to £100,000 to each of up to 15 employees, is being broadened by removing the limit on number of employees and increasing the total value of options to £2.5m in a company.

The Inland Revenue will consult on the drafting of new rules, and comments are welcome to Richard.V.Lambert@ir.gsi.gov.uk.

Finally, the Treasury has addressed the uncertainty over the scale of National Insurance liabilities on options that were granted between 6 April 1999 and 19 May 2000 (when the National Insurance liability was transferred to the employee). Legislation will be introduced to limit the amount of National Insurance to that due on the gain in share value as at 7 November 2000. What that means for a company depends on how their share price has performed, evidently, but for many dotcoms (who were the loudest complainers about the rules when their shares were inflating) it may mean that with most share options under water there won't be any liability on options issued before May 2000.