Schedule 10 - Chargeable gains: taper relief: minor amendments
Finance Bill
4:30 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I beg to move amendment No. 31, in page 181, line 16, leave out 'means' and insert 'includes'.
This is a technical amendment to cure a drafting defect. Schedule 10(5) defines the term ''interest in shares'', which is welcome because the acquisition or disposal of an interest in shares is often a significant taxable event. The definition in the Bill is probably too restrictive, however: it is confined to cases of co-ownership. It excludes cases in which an individual acquires a less than full interest in shares because, for example, legal title is lodged with a trustee, nominee or separate contractor under a separate contractual arrangement.
Circumstances in which that could occur include an award of shares to an employee subject to the risk of forfeiture, a case on which the Chancellor of the Exchequer introduced a new income tax regime in 1998. If that were not regarded as an interest in shares, an individual would not be regarded as having ownership for the purposes of taper relief and would be exposed to the full rate of capital gains tax upon the shares' sale. That would sabotage the thinking behind the Chancellor's reforms to the tax and penalise a large number of employees. I trust that the Economic Secretary to the Treasury will either tell me that there is a miraculous interpretation of the schedule that we have missed, or confirm that there has been a mistake in drafting, which the amendment would correct.