Clifford Chance

Employee Benefits Newsletter October 2012

10 October 2012

Welcome to the October 2012 edition of Employee Benefits News.

In this edition we highlight the opportunity for the deferral of income to take advantage of the reduction in the 50% income tax rate to 45% from 6 April 2013.  Even with that reduction, the UK tax system will still be asymmetrical in that CGT treatment (at a maximum rate of 28%) is invariably preferable to income tax treatment.  It therefore also remains extremely worthwhile to consider arrangements which are designed to make the employee's gain subject to CGT rather than income tax/NIC.  We therefore highlight "growth share" arrangements, which are designed to make the employee's gain subject to CGT rather than income tax/NIC.  

In addition, we outline new plans announced by the Chancellor earlier this week to provide for CGT relief on employee-shares acquired in return for the waiver of certain employment rights.

We also provide an update on HMRC's EBT Settlement Opportunity, which is HMRC's approach to resolving what they view as the historic abuse of (in particular) EBT sub-trust arrangements.  At the present time, it remains far from certain whether the opportunity to settle will appeal to many employers.    

Finally, earlier this year we reported that the Office of Tax Simplification had commenced its review of unapproved share arrangements.  The OTS has now published its interim report following a fact-finding exercise.  We summarise some of the key tax-related difficulties the OTS has identified so far.  

 

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