George Osborne’s speech - key tax issues
I have to say, if you went through the speech and deleted the rhetoric and sniping at the opposition, it was a lot shorter. There were few surprises on the tax front, but there was one; the Chancellor introduced a new concept in legal and tax terms – an employee-owner. The way this is envisaged to work is that an employer gives shares in the company to an employee in return for the employee giving up (some of?) his employments rights (redundancy and unfair dismissal were mentioned). Subject to that (and presumably some other details yet to be announced) any gain on the shares will be exempt from tax on exit. A consultation is promised shortly with the legislation set to apply from April 2013. It will be interesting to see how many employees would wish to trade employment security for a stake in their employer. I suspect the legislation aimed at stopping this from being used to avoid tax will be complicated. Nevertheless it is an interesting idea with potential benefits.
On other matters, the Chancellor again emphasised that the rich should pay a higher share of taxes and claimed that he was succeeding in this aim despite abolishing the 50% tax rate. I assume he is looking at the legislation aimed at preventing the use of PAYE free payments from offshore structures and other measures aimed at stopping evasion as well as increases in indirect taxes. He also promised no temporary wealth tax (at least in the life of this parliament), nor a mansion tax – thank goodness for that!
He promised (if that is the right word in the circumstances) a continuing attack on tax evasion and on aggressive tax avoidance. I would have liked a definition of aggressive but at least this time he has differentiated between the illegal and legal planning.
Date: 9th October, 2012
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