TaxPersonal TaxBudget 2000: Chancellor fails dot.com companies on multimillion pound bills

Budget 2000: Chancellor fails dot.com companies on multimillion pound bills

The government has failed to deliver dot.com companies the national insurance cuts they had hoped would cut the multimillion pound bills they face for offering employees share options.

Last month Robert Dighero, finance director of internet auction site QXL, accused the Treasury of ‘stabbing internet companies in the back’ after the online auctioneer revealed it would have to pay up to £14.8m extra in national insurance on employer share options.

But the Inland Revenue said on Tuesday it would only ‘consider’ legislation to give employers more certainty about their exposure to future national insurance liabilities when issuing share options. They failed to say when they would legislate or what form that legislation would take.

The Revenue did promise to consider a range of options including allowing all or part of employers’ NICs on unapproved share option to be met by employees. It admitted the ‘suggestions would give employers, particularly those with high growth potential, much more certainty about their exposure to NICs liability’.

And it added: ‘The government is attracted to improving flexibility in this area for business and is considering legislation.

But KPMG head of share schemes David Tuch said: ‘We are disappointed that it is still not clear what the government are going to do to address this issue.’

And Tuch urged the government to ensure any changes introduced apply to all companies and not just internet start-ups and similar high-tech companies.

Calling on ministers to abolish employers’ NICs on unapproved options, Tuch said as a minimum the government should either cap gains at £50,000 on options exercised in any one year or allow employers to recharge NICs to individuals.

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