Currently sitting on my desk are five consultations set to be introduced after the Budget.
First, there are 28 pages setting out the draft legislation for enterprise management incentives.
This scheme is meant to encourage key individuals to leave their existing employment and join small but ambitious companies by offering a tax-incentive option scheme. This will be available to only 10 key employees (so bad luck if your employer thinks you are the 11th most valuable member of the team). The proposal looks a bit like the ‘old’ approved share option scheme before the introduction of the £30,000 cap.
The next consultation includes a 38-page document covering draft legislation for the new all-employee share plan. It includes employers giving ‘free shares’ to employees which are free of tax and NIC. There are ‘partnership shares’, ‘matching shares’ and ‘dividend shares’ all offering ways of encouraging employees to have a tax-advantaged share plan.
The drafting of the rules leaves a lot to be desired and seems to have been drawn up with a singular ignorance of the ongoing work and style of the Tax Law Rewrite Project. Administratively the plan looks daunting, but it may provide a useful new vehicle for employers. The remaining issue is where the plan fits with existing schemes, such as the popular save-as-you-earn scheme.
The third item relates to tonnage tax weighing in at 53 pages.
Next is the 57 pages of draft legislation on the corporate venturing scheme to encourage more profitable large companies to invest in smaller companies. While it is always good to see incentives for business, it is strange to see a scheme which mirrors a personal tax relief so closely, namely the enterprise investment scheme. Ironically, the CBI has just issued a report as to why EIS has been a failure – the main findings of which suggest it is too complicated and not worth the risk.
Finally, the paper tackles the climate change levy draft legislation, which takes up 93 pages.
So already there are 269 pages of draft legislation. On top of this will be the usual raft of income tax provisions and, it is rumoured, substantial provisions relating to stamp duty. The current wave of legislation is good news for the parliamentary draftsmen but daunting news for those who have to administer, advise and use it. ?:
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