Schedule 13 - Employee share ownership plans: amendments
Finance Bill
11:30 am
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
I will respond directly to the hon. Gentleman's point, which was referred to in the unselected amendment. The all employee share ownership plan is not an option plan; it provides tax incentives to employees and employers when employees take a stake in the company for which they work. They have an interest in the shares from the time that they are awarded, and tax benefits apply if an employee holds those shares for five years. If the shares are taken from the plan within five years and there is an income tax charge, there will be a national insurance liability, because the two charges are aligned.
As the hon. Gentleman mentioned, we have made an exception for share options to give special help for the high-growth sector where options rather than share awards often form an integral and substantial part of remuneration packages. In such cases, the timing and amount of the national insurance liability is uncertain and companies can experience problems with investment strategies and growth plans. However, there is no prospect that national insurance liabilities in the all employee share ownership plan will have the same consequences. We do not want employers to pass national insurance liabilities in the plan to employees in this case, because that would act to discourage employees from taking part. The scale is different, and it would not be appropriate to make a change in the schedule analogous to the one that we made with share options.
Question put and agreed to.
Schedule 13, as amended, agreed to.