Gareth Thomas – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Gareth Thomas on 2016-05-18.

To ask Mr Chancellor of the Exchequer, if he will conduct a consultation with small and medium-sized enterprises on potential steps to support and encourage the take up of employee share ownership schemes after the withdrawal of the valuation check service by HM Revenue and Customs on 31 March 2016; and if he will make a statement.

Mr David Gauke

Tax-advantaged employee share schemes are greatly valued by both companies and employers, and the government wants to make sure that the rules surrounding these schemes are as simple and clear as possible. Budget 2016 made a number of changes to the rules for employment-related securities and options which will make these schemes fairer and easier for taxpayers to understand, and therefore encourage businesses to use them.

An HM Revenue and Customs (HMRC) commissioned report conducted by Oxera considered the effect of the tax-advantaged employee share schemes on productivity. The report is available at: http://webarchive.nationalarchives.gov.uk/20110203095056/http://www.hmrc.gov.uk/research/tax-advantaged-report2.pdf.

The government’s most recent assessment of the cost of the tax-advantaged employee share schemes to the Exchequer is provided in the table below.

Forecast cost of Income Tax relief (2015-16)

Forecast cost of National Insurance relief (2015-16)

Share Incentive Plan

£220 million

£165 million

Save As You Earn

£180 million

£140 million

Enterprise Management Incentives

£70 million

£40 million

Company Share Option Plan

£70 million

£40 million

HMRC has not withdrawn the valuation checking service for the tax-advantaged employee share schemes. However, HMRC has withdrawn other checks for non-tax advantaged schemes as, in the majority of cases, acceptable valuations were submitted. Therefore, the valuation service added no value and is seen as unnecessary.

The government keeps all areas of the tax system under review and as part of that in always interested in understanding the views of all interested parties.

Treasury Ministers and officials have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery. Details of ministerial and permanent secretary meetings with external organisations on departmental business are published on a quarterly basis and are available at: http://www.gov.uk/government/collections/hmt-ministers-meetings-hospitality-gifts-and-overseas-travel