Chancellor Gordon Brown boosted startups' abilities to offer share options for all staff in his Budget speech yesterday. But he will have disappointed many other IT workers by failing to help with so-called 'unapproved' schemes.
The Enterprise Management Incentive, which previously allowed a startup to grant tax-free share options to just 15 staff, will now be open to all employees.
The scheme is available to startups with assets of less than £15m. Brown also announced that a company's total options under the scheme can rise from £2.5m to £3m.
"It's to be welcomed," said David Ellis, senior manager of accountant Ernst & Young's share planning team. "I think we will see a lot more companies implementing them."
However, Brown did not change the Company Share Option Plan, which can be used by any firm, but which limits individuals' options at the time of granting to £30,000. Schemes which exceed this are 'unapproved', and employee proceeds can be taxed at up to 47 per cent. The news prompted vociferous complaints from the IT industry.
"We still take the line that workers are discriminated against," said Tim Conway, director of industry affairs for the Computer Services and Software Association, comparing them with investors who are taxed at a maximum of 40 per cent. "We will continue to lobby in that area."
Brown made one other change to capital gains tax which may affect employee share-owners at some technology companies.
Previously, staff at some kinds of companies have not had access to the lowest 10 per cent rate of capital gains tax for long-held shares. This will now be open to employees of all firms.
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