The PBR in December included the following items relevant employee share incentives:

  • The previously announced increase of 0.5 per cent in both employee's and employer's National Insurance Contributions from April 2011 will now rise by a further 0.5 per cent. For an additional rate taxpayer, this will lead to an effective rate of tax on a fully taxable share scheme (assuming the employee also bears the employer's NICs) of an eye-watering 58.9 per cent!
  • New draft legislation has been published to extend the Disclosure of Tax Avoidance Schemes (DOTAS) regime. Details of tax avoidance arrangements must be notified to HM Revenue & Customs if, amongst other criteria, they possess certain "hallmarks". A number of new "hallmarks" are proposed, including one which targets schemes aimed at reducing or deferring employment income and one aimed at schemes that convert what would otherwise be employment income into capital gains. Consultation on the draft legislation runs until 19 February 2010.