In the long-running debate between the government and high-technology firms over Finance Bill proposals to transfer the responsibility for National Insurance charges on the exercise of share options to employees, Financial Secretary Stephen Timms has now announced that the employees will be allowed to deduct the extra National Insurance they pay from income tax due on their gains.
Stephen Timms said 'Allowing employers and employees to come to an agreement to recover or transfer the National Insurance charge should provide a technical solution by completely eliminating the unpredictability of the charge. Many of the companies that responded to the consultation said that they will use this solution. I intend to continue this dialogue about how we can make Britain the best competitive environment for e-commerce. We want to attract business and jobs to Britain and help British companies compete in the global market. Giving the employee tax relief for the National Insurance they will pay will help to ensure that the UK tax system remains highly attractive'.
Prior to the this year's budget, companies had to provide for possible National Insurance costs on the possible future exercise of all the stock options they had issued. For dotcoms in particular, whose financing relies upon attracting expensive staff with plentiful options, the stratospheric behaviour of their share prices was leading to real pain, with massive balance sheet liabilities being incurred. In the original Finance Bill, the Chancellor attempted to help (?) by transferring the liability for the National Insurance charge (just call it a tax) to the employees. But this meant a marginal tax rate for the employee of 58%, uncompetitive by the standards of other countries. The new concession reduces the marginal rate to 52%.
This latest move by the government appears to have appeased some but not all companies. Whilst some see it as empowering them to continue with their stock option schemes, others view the Treasury's proposals as extremely restrictive. Stephen Allot, president and CFO of US software group Micromuse said the proposals were a 'penalty on success'
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment