Tax proposals 'to benefit 6,000'
SOME 6,000 small businesses will benefit from proposed changes to share option taxation, say accountants PwC.
The Chancellor plans to extend Enterprise Management Incentives which give favourable tax treatment for small company option schemes, from firms with gross assets up to £15m to those up to £30m.
The main beneficiaries will be traditional manufacturing and trading start-ups. The previous, lower ceiling mainly helped high-tech companies, which tend to have fewer assets.
Under the scheme, employees pay no income tax when they exercise share options, and 'taper relief' on capital gains kicks in earlier.
The Chancellor also lightened taper relief on all employee share schemes. Capital gains on shares held for a year is cut from 35% to just 20%, and on those held for two years or more from 30% to 10%. The Chancellor argued the changes puts Britain ahead of rivals, including the US.
However the changes only apply to shares held by a company's own employees. For everyone wishing to save for their old age by investing in British business, capital gains tax remains 40%.
The US, by contrast, has introduced universal taper relief. Gains on shares held for more than a year are taxed at just 20%.
Carol Dempsey, partner at PwC specialising in option schemes, welcomed the changes but regretted the chancellor did not take more steps to help small firms, such as slashing red tape.
