RM2 > Resources > News > The Phantom Budget 2010: minor measures against share scheme avoidance

The Phantom Budget 2010: minor measures against share scheme avoidance

Posted on March 24, 2010

The anti-avoidance measures announced today relate particularly to the Share Incentive Plan (SIP) and the Company Share Option Plan (CSOP). The basic tax advantages of these and other government sponsored schemes, including the Enterprise Management Incentive (EMI) and the Savings Related Share Option Scheme, are unaffected.

Today's share scheme announcements were as follows:

  • From today, options cannot be granted under a CSOP in the shares of a subsidiary of a listed company. It would appear that some advisers were structuring growth share plans via CSOPs in a way that HMRC found abusive.
  • Also being closed down from today are tax avoidance schemes exploiting corporation tax deductions on the value of shares used for a Share Incentive Plan. Action is also being taken against SIPs where the underlying value of the shares is manipulated.
  • There will consultation during the summer of 2010 on so-called geared growth schemes, especially within Company Share Option Plans.
  • Action is to be taken to counter the use of arrangements to reward employees through the use of trusts or other intermediaries, with the purpose of avoiding, deferring or reducing liabilities to income tax and NICs or avoiding restrictions on pensions tax relief. We believe this refers to the use of EBTs and EFURBS (employer funded unapproved retirement benefit schemes) to avoid or defer tax. It is intended to introduce legislation from April 2011.
  • There will be legislation in 2011, following consultation, to simplify the rules relating to 'transactions in securities' that also better targets avoidance schemes in this area. This measure will effective for any income tax advantages obtained from today.
 
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