TaxPersonal TaxIs the chancellor really helping dot.coms?

Is the chancellor really helping dot.coms?

The chancellor seems to have completely missed the point for e-business start ups.

The capital gains regime of 10% is helpful for dot.com founder shareholders but most dot.coms reward their employees with options. After this Budget it looks as if these options will be taxable at 52% on employees who contribute to the capital growth of the business.

However passive shareholders who add nothing but their capital will pay just 10%. This is not the way to help the UK become the dot com capital of Europe because businesses will locate their management teams and employees in places like Belgium which have a much more advantageous tax regime for employee option holders.

Gordon Brown has said he is reviewing the National Insurance burden on share options, allowing companies to pass that cost on to employees. What he should be doing is taxing options for what they are, a capital growth play, taxable as capital gains.

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