Clause 49 - Shares acquired on same day: election for alternative treatment
Finance Bill
5:00 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I thank you, Mr. Gale.
Amendment No. 21 is our preferred way of addressing an issue of which the Government may be aware, as it has been raised by the leading lawyer on government law and enterprise management incentive schemes. Amendments Nos. 22, 23 and 24 are less effective alternatives to amendment No. 21.
The amendments attempt to cure what might have been a drafting oversight in the Bill. The intention is to provide employees with the right to elect that certain sales of shares can be charged to capital gains tax where there is a possible gain. The choice arises because, in certain circumstances, the shares may have been acquired under an option without being liable for income tax. The Bill cites two situations in which that can arise--the exercise of a company share option and one category of EMI option--but it omits too further types of EMI options. There is no sensible reason to distinguish between those different cases of EMI option, a category of tax-exempt incentives introduced by the Chancellor in 2000. It makes good sense to ensure consistent treatment, especially in a provision that is designed to be helpful and to simplify the tax position of employees.