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PricewaterhouseCoopers International Assignment Solutions (IAS) is a special practice unit of tax professionals who
spend 100% of their time with consulting and compliance issues for international assignees. If you have any questions
concerning this Global Watch, or would like further information concerning our IAS capabilities, please contact Michael
Budnick, IAS Global Leader at (646) 394-3156.
pwc IAS Global Watch
Page 2 April 29, 2004
PricewaterhouseCoopers International Assignment Solutions (IAS) is a special practice unit of tax professionals who
spend 100% of their time with consulting and compliance issues for international assignees. If you have any questions
concerning this Global Watch, or would like further information concerning our IAS capabilities, please contact Michael
Budnick, IAS Global Leader at (646) 394-3156.
pwc IAS Global Watch
Page 3 April 29, 2004
the past to counteract arrangements that are This relaxation will widen the availability of EMI to
perceived to be inconsistent with Government tax more groups of companies.
policy objectives or produce a result that
Parliament did not intend. Discretionary trusts
The rates of tax paid by trustees are to be
Income tax relief for Employer’s NIC on changed with effect from the 2004/2005 tax year
restricted and convertible securities and this will affect employee benefit trusts that
Since 2000, employers have been able to agree are tax resident in the UK or receive UK source
or jointly elect with employee option-holders that income. The rate of tax for dividends will change
the secondary Class I NIC liability arising on from 25% to 32.5% and the general rate of tax for
option exercise will be paid by the employee. This discretionary trusts will increase from 34% to
facility is being extended to cover restricted and 40%.
convertible employment related securities by the
National Insurance Contributions and Statutory Other employee tax changes
Payments Bill 2004, currently going through Changes are being introduced to provide tax
Parliament. Once that Bill becomes law, exemptions from benefit-in-kind charges for
employers will be able to agree or jointly elect employer-provided childcare.
with their employees that they will bear the
employer’s NIC liability arising on post-acquisition In addition, there will be a relaxation in the
income tax charges. taxation of computers loaned to employees by
their employers.
The Finance Bill provides income tax relief by
allowing employees to deduct the amount of any Finally, the rules for employer provided vans are
Employees Class I NIC they paid. being changed, including an increase in the
charge when an employee enjoys unrestricted
Enterprise Management Incentive schemes private use of a van.
Enterprise Management Incentive (“EMI”)
schemes are a tax-favored employee share Conclusion
option arrangement introduced by the Although much of what we see in the 2004
Government in 2000. It is aimed at smaller, Finance Bill was announced in the Chancellor’s
higher risk companies, to help them recruit and Budget speech on 17 March 2004, and
retain key workers. It allows qualifying subsequent press releases, there is
companies to grant options over shares worth up approximately 300 pages of detailed legislation to
to £100,000 per employee, up to an overall plough through. It does help with getting more
maximum of £3m for each company. clarity around the pension issues and what is
envisaged with regard to the new disclosure rules
As expected, legislation is being introduced to for tax planning arrangements. However the
relax the qualifying subsidiary rules. Since EMI practical issues around how these changes will
was first introduced, the parent company of a operate will only become clear over time. Allowing
corporate group could only grant EMI options if all employees to transfer SIP and SAYE shares to
of its subsidiaries were at least 75% owned by registered pension schemes is likely to give these
that parent. Under the new legislation, for options plans a boost, particularly when some companies
granted on or after March 17, 2004, options will have been re-considering their future use in the
be able to be granted by a parent of a group, light of the introduction of the new accounting
provided all subsidiaries are more than 50% rules.
owned by that parent.
PricewaterhouseCoopers International Assignment Solutions (IAS) is a special practice unit of tax professionals who
spend 100% of their time with consulting and compliance issues for international assignees. If you have any questions
concerning this Global Watch, or would like further information concerning our IAS capabilities, please contact Michael
Budnick, IAS Global Leader at (646) 394-3156.
pwc IAS Global Watch
Page 4 April 29, 2004
PricewaterhouseCoopers International Assignment Solutions (IAS) is a special practice unit of tax professionals who
spend 100% of their time with consulting and compliance issues for international assignees. If you have any questions
concerning this Global Watch, or would like further information concerning our IAS capabilities, please contact Michael
Budnick, IAS Global Leader at (646) 394-3156.