Is the government helping your career?

IT seems to have been pretty high on the UK government's agenda during the past year, with two new bills relating to our industry making it into the statute books in 2000. And, with last year's appointment of so-called e-minister Patricia Hewitt - the first minister with responsibility for ecommerce - and Tony Blair's pledge to make the UK the best place in the world to conduct ebusiness by 2002, the government seems to have bent over backwards to appeal to IT. But how does it affect your career?

Legislation aside, the most significant government actions affecting IT staff have come from the Chancellor's Budget statements - but it's not all good news for IT professionals.

Share options
As part of the 1999 Budget, Gordon Brown announced that many share option schemes would be liable to employer's National Insurance contributions, charged at 12.2 per cent, on the increase in share option values.

So if your options had risen by £10,000, your employer would have needed to show it had £1220 handy to pay National Insurance on your windfall, even if you weren't in a position to exercise your options.

In spring, auction website QXL highlighted the ridiculous nature of the situation after it revealed that its share option tax liability was bigger than its total turnover.

After consultation and threats of less inward investment from executives at US giants Oracle and Cisco, the government decided to allow companies to transfer this liability to staff. This may be good for a company's balance sheets, although those holding the options will be taxed at 47.3 per cent when income tax and both kinds of national insurance are taken into account.

There is a way round it. The answer lies in the Inland Revenue-approved share option schemes, which are not liable to tax. One scheme allows share options to the value of £30,000 per person, and the other grants unlimited options to 15 members of staff - a concession granted in the 2000 Budget for key employees. If you're offered share options, bear in mind how much more an approved scheme is worth.

"Many companies are going for approved schemes," says Andrew Bell, a tax partner for PricewaterhouseCoopers.

The measures were introduced as a means to retain key staff, so it's worth bearing in mind when you join a company what schemes they have in place, and try to make sure you're one of the 15 employees on the list.

The implications of IR35
The other big news in the 1999 Budget was buried away in the last of 35 press releases from the Inland Revenue - giving rise to one of the hottest debates in the contractor community.

IR35 came into force in April, and meant that contractors working through service companies and judged to be working in a similar manner to full-time staff became liable to similar levels of taxation. Previously, some contractors had paid themselves partly in share dividends from their personal companies to take advantage of lower tax rates.

The impact of IR35 has, by all accounts, not proven to be as disastrous as predicted. Although some contractors working through single person companies have left the country as a direct result of IR35, fears of an exodus seem to have been baseless.

"I think IR35 might have tipped the balance for those who were considering moving abroad," says John Eary, head of the National Computing Centre's skills source consultancy. "I don't think it will motivate many people purely on that - I think that's been a bit overrated."

There are ways, however, for freelancers to get around IR35 without emigrating. The Inland Revenue allows people to continue with the existing lower tax regime if they are working in a way deemed to be 'self-employed'.

Full details are available on the tax collector's website at www.inlandrevenue.gov.uk, but pointers to self-employment include working from home, charging by the job rather than the day, taking responsibility for a task rather than reporting daily to a member of your employer's staff, and accepting more risk.

Problems working abroad
Although a change of government policy on the immigration of technically-skilled workers has, at first glance, more significant and direct implications for foreign workers looking to work in the UK, there are wider implications for British IT workers.

The policies have been introduced to counter the IT skills shortage, the effects of which are being felt around the globe, and other governments have also responded by introducing similar plans as the quest for IT talent reaches manic proportions.

In May, Education and Employment Secretary David Blunkett described a plan to give priority to visa applications from those possessing certain IT skills - notably analyst programmers, software engineers and database specialists (all within defined specialisms), IT managers, business analysts and network specialists.

Other government measures include a pilot scheme with US investment bank Merrill Lynch, allowing companies to self-certify staff for visas. The government wants to pull in new staff partly because other countries, such as the US, are happy to welcome UK workers, although the former's visa scheme has an inadequate upper limit that is usually reached months before the end of each 12-month period.

On the surface, this might seem to threaten UK IT workers - but the move has been welcomed by industry bodies such as the Computing Software and Services Association (CSSA). "What the government has done with visa requirements is quite good," says policy manager Richard Sullivan.

The need for certain IT skills is such that UK staff are more likely to be threatened by foreign companies abandoning the country for lack of workers, rather than having jobs taken by those coming from abroad.

The effects of the RIP Bill
Two parliamentary bills affecting IT were passed during the past 12 months. The least controversial of the two was the Electronic Communications Bill, which gives digital signatures the same status as written ones - although legal purists point out that English and Scottish law rarely required written signatures anyway.

The bugbear is the Regulation of Investigatory Powers (RIP) Bill, passed in July. It regulates how enforcement agencies tap internet traffic - giving the government far more power than elsewhere in the industrialised world, according to RIP's opponents.

At the draft stage, RIP even directly threatened IT staff with a move that would definitely be career-limiting - a spell in prison.

The legislation obliges IT staff to hand over encryption keys to emails when requested by the security services. If the staffer said they had been lost, the court would decide on the balance of probabilities if this was true.

After widespread opposition, this was changed to the more-usual criminal level of proof, with the prosecution having to prove beyond reasonable doubt that the keys had been maliciously 'lost'.

The Bill may still negatively impact the UK's IT industry. Three internet service providers - Poptel, GreenNet and Claranet - said last month they may move parts of their operations offshore to protect their clients' security.

And it's likely that companies with sensitive data, such as big financial institutions, will decide, quietly, to do likewise. This may reduce career opportunities in the IT security field, but with the Act not in force until October, it is too early to say. In any case, it seems another example of the technology business in the UK being made that little bit more difficult.

"It's yet another bit of irritating legislation," says Helga St-Blaize, co-founder of IT marketplace Ace-quote.com. "We're having to take legal advice. You just want to get on with running the business."

Despite efforts to promote itself as IT-friendly, how has the Labour government succeeded in rubbing so many IT professionals up the wrong way?

"I think it comes back to lack of joined-up government," says Sullivan. "The Department of Trade and Industry, which employs the ecommerce minister Patricia Hewitt, who promoted the visa scheme, and Citu [the Central IT Unit] normally does well, but the RIP Bill is from the Home Office, share options is from the Treasury and IR35 is from the Inland Revenue. There's no onus on the Treasury to sit down with the DTI and say 'OK, what will the effect be on ecommerce?'"

In the meantime, despite steps in the right direction, the government stands little chance of realising Tony Blair's ambition to make the UK the best place to work in ecommerce until it starts co-ordinating IT policy across all departments. As John Major once said: "Fine words butter no parsnips."

However, the worst immediate problems involve tax - and if you are aware of the specifics, you may well be able to find a way around them.

• More information on IR35 can be found at www.inlandrevenue.gov.uk/home.htm.
  For ways to work with IR35 see www.shout99.com.
  The latest details on the government's immigration schemes are available at www.dfee.gov.uk/ols.