Shadow paymaster general Howard Flight claimed the higher rate was as a result of the increase in national insurance contributions, announced in the Budget, coupled with arrangements for the employee to pay both his own and his employer’s contribution on the value of the shares.
Speaking in Commons, during detailed debates of the Finance Bill, Flight said the previous effective charge was 49% payable on exercise of the option and pressed for an amendment, which would have delayed payment of tax and NICs until the shares were disposed of.
But paymaster general Dawn Primarolo defeated the proposal by 13 votes to six, and issued this harsh response: ‘Absolutely no, not under any circumstances.’
She said the amendment would indefinitely defer the tax due on receipt of shares received outside an approved scheme ‘perhaps paid as a form of salary sacrifice, which is a different way of paying them basically to avoid tax’.
And she added, the government had a wide range of approved schemes on offer.
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