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Tax professionals urge Chancellor to simplify government-approved share schemes

printer Mail

Tax advisers have endorsed the key recommendations of the Office of Tax Simplification to simplify government-approved employee share schemes, including a self-certification process to replace the current process of HMRC approval; further work to establish whether the Company Share Option Plan (CSOP) should be retained or phased out; and a possible merger of CSOP schemes with Enterprise Management Incentives.

John Whiting, Tax Director for the OTS, said employers ‘saw real benefits [from approved schemes], citing greater commitment from employees and better engagement across all employees’. Review of tax advantaged employee share schemes: Final report, published yesterday, is available on OTS section of HM Treasury’s website.

Many of the recommendations address issues that advisers and companies have been lobbying on for some time, said Isabel Pooley of the law firm CMS Cameron McKenna. ‘Given that some previous attempts at simplification have suffered from a lack of space in the Finance Bill, HM Treasury should be encouraged to introduce these changes at the earliest opportunity.’

Giles Capon, Tax Partner and National Head of Performance & Reward at Ernst & Young, said ‘too much dust’ had been allowed to settle on the system of approved schemes. The OTS report was the first stage in a much needed reform.

‘At a time when government is looking for the business sector to drive economic growth, the ability of companies to provide tax efficient incentives to their employees through share ownership is key. Cutting red tape makes good sense. We believe that tax advantaged discretionary share options should continue to be available to employees of companies of all sizes,’ he said.

‘Merging Enterprise Management Incentives and Company Share Option Plans is step in the right direction. We would encourage the Chancellor to grasp the opportunity presented to him by the OTS report and provide a much needed and long overdue boost to tax relieved share plans in the UK.’