The Government yesterday laid regulations to help companies who grant share options to their employees as part of their remuneration packages but who experience highly volatile share prices.
The new regulations, which follow new legislation introduced in the summer, provides the process to enable employers to seek approval so that they may make an election with their employees, which transfers the liability for employer's National Insurance contributions from the employer to the employee. This will solve accounting difficulties and also help smaller start-up companies with limited cash flow.
Financial Secretary Stephen Timms said, "I am very grateful to those companies and their representatives whose contributions have helped develop the process under which share option elections can be made. Allowing employers and employees to make an election to transfer the National Insurance charge provides a technical solution by completely eliminating the unpredictability of the charge. I am also pleased that many companies have already made applications to use this solution."
The inland revenue notice on this scheme originally anticipated the regulations being laid by mid September.
