Schedule 2 - Employee securities: anti-avoidance
Finance Bill
6:15 pm
Dawn Primarolo (Paymaster General, HM Treasury; Bristol South, Labour)
The amendment has two legs. First, as the hon. Gentleman said, it seeks to provide a safe haven to ordinary investors from the scope of the revised chapter 4 provisions. Ordinary investors undertake transactions with an investment purpose. Those transactions should not deliver employment reward to an employee. The amendment is unnecessary; and in the complexity of its wording it could create legislative opportunities for people to exploit future avoidance schemes.
I reiterate what I said to the hon. Gentleman earlier, when I made it clear that the change does not bring a tax and national insurance charge on all benefits derived from securities. Benefit in the context of schedule 2 means employment reward, or the passing of value to the employee in return for the employee's labour. When investors are carrying out their normal investment transactions, the change will not affect them. Frankly, that statement clearly covers the point that the hon. Gentleman makes in the example.
The second leg of the amendment introduces a clearance procedure for benefits received in relation to employment-related securities. I answer briefly, because I have said it a number of times already. A clearance procedure is not necessary. The statement of 2 December 2004, which was made alongside the pre-Budget report, made it clear that in the area of employment rewards, people can find certainty by considering the statement in the context in which it was made, which is that legislation by successive Governments over a number of years deals with the avoidance of income tax and national insurance on remuneration in that narrow area.
Clearance is not necessary. All the information is in the public domain; it is for each taxpayer to comply with it. This is not the time for a debate on whether clearance should exist or about its purpose, but clearance is not necessary in this case because the statements are clear. The taxpayer should be clear about our intentions from the Bill. I therefore ask the hon. Gentleman to consider withdrawing the amendment. If he wishes to press it to a Division, I shall ask my hon. Friends to oppose it.