TaxPersonal TaxIFS predicts tax breaks on share options

IFS predicts tax breaks on share options

The Institute of Fiscal Studies is expecting chancellor Gordon Brown to unveil larger tax breaks for share options in small, high-risk companies in his Budget on 7 March.

The institute believes the chancellor will extend the scope of the enterprise management incentives, designed to give tax relief on share options worth up to Pounds 100,000 per employee, in order to help growing companies hold on to important staff, the Financial Times reported today.

The scheme, introduced last autumn, is currently limited to 15 employees per company.

However, in the pre-Budget report, the chancellor proposed to extend it to all employees up to a ceiling of Pounds 2.5m of a company’s shares – Pounds 1m higher than the original limit.

EMI applies to companies in high-value areas of manufacturing, services and e-commerce with gross assets of up to Pounds 15m. So far 450 companies have taken advantage of the scheme.

The IFS also suggested the chancellor would have approximately Pounds 2bn to spend on tax cuts after accounting for a Pounds 1.75bn package of transport tax cuts put out for consultation in last November’s pre-Budget report, less than the Pounds 3bn to 4bn some other organisations have predicted.

Links

AccountancyAge.com’s Budget 2001

IFS online

Inland Revenue page on Enterprise Management Incentives

Analysis – The share scheme ifs, buts and maybes

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