E-PAY
Tax regime for share plans requires urgent reform
New economy companies are dissatisfied with the UK government policy on employee share schemes, according to an international study by City law firm Taylor Joynson Garrett in conjunction with London Business School.
TJG is pressing the government to simplify the system or the industry could face ever-worsening recruitment and retention problems. The whole system relating to the taxation of share options has now become overly complex and hedged around with sometimes illogical regulation. It suffers from the introduction of schemes on a piecemeal basis.
Key survey results
Half of UK-listed technology companies say the tax treatment of share option schemes is discouraging .
In contrast, three-quarters of US-listed businesses viewed their Government’ s policies as either positive or adequate .
The amount of equity owned by UK employees was just half of that in the US.
Two-thirds of UK technology companies gave away less than 10% of equity to employees. In the US, more than half of companies granted employees stakes of between 11% and 25%.
The last word
Says TJG: The results of the survey have highlighted a wide gap between the UK government’ s rhetoric about supporting the knowledge-based sector and the actual implementation of its policy.
Want to know more?
Title: IPOs for technology, media and telecoms companies: a comparative study of the US and UK, by Taylor Joynson Garrett and London Business School.
Methodology: The survey is based on information from 101 telephone interviews of finance directors or other senior managers in technology, media and telecoms (TMT) sectors. It was undertaken during July and August 2000.
Sample size: The sample consisted of 55 US companies traded on NASDAQ (out of a total sample of 689) and 46 UK companies (177 sample).
Availability: contact Lisa Tooley, PR manager, Taylor Joynson and Garrett in London, tel: 020 7300 7000, or email ltooley@tjg.co.uk
You will find details of the research at the Taylor Joynson and Garrett web site www.tjg.co.uk