Clause 2 - Effect of notice under s. 1
Social Security Contributions
11:30 am
Mr Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
I believe that I can reassure the hon. Gentleman that the Bill does not require employers to observe a level of accuracy that is not demanded elsewhere in tax or social security legislation. In respect of share options gains, the method of calculating the special contribution is the same as for any secondary class 1 contributions. As drafted, the clause specifies that the special contribution is calculated in the same way as a class 1 contribution that would have been payable
``by virtue of section 4(4)(a) of the Contributions and Benefits Act if the right had been exercised in full on 7th November 2000''.
That section is then calculated by reference to the taxable gain under section 135 of the Income and Corporation Taxes Act 1988. That deals with the level of accuracy referred to by the amendment, because it considers
``the amount that a person might reasonably expect to obtain''
from the sale of the shares on the open market at the time. The wording is covered—admittedly at two steps removed—by the wording in the 1988 Act. As the point raised by the hon. Member for Arundel and South Downs is covered, the amendment is unnecessary.