Tax Day on 30 November included no new measures in the share scheme arena. If it was notable for anything relevant to share schemes (as was true of the recent Budget as well) it was the very modest scope of new measures generally on capital taxes despite last year’s wide ranging review of CGT by the OTS. But amongst the papers published on Tax Day was a paper entitled non-structural tax reliefs and objectives.
Within these non structural reliefs were listed EOT tax reliefs and the Corporation Tax relief on the exercise of share options. By implication the mainstream employee share scheme reliefs such as EMI, SIPs, CSOPs and SAYE were structural or integral reliefs.
This distinction between structural and non structural reliefs is a relatively new concept that surfaced in a NAO report in 2019 (see https://www.nao.org.uk/report/the-management-of-tax-expenditures/) and the NAO says;
“The UK tax system had 1,190 tax reliefs (as at October 2019). A tax relief reduces the tax an individual or business owners. There are two broad categories of tax reliefs: structural tax reliefs that are largely integral parts of the tax system and define the scope and structure of tax (such as the personal tax allowance); and non-structural tax reliefs where government opts not to collect tax to pursue social or economic objectives.
Non-structural tax reliefs are often referred to as ‘tax expenditures’. Examples include tax credits for companies’ research and development (R&D) costs and income tax relief on pension contributions. Some tax expenditures simply reflect a policy choice by ministers to support particular groups or sectors (for example the housing market), while others are designed to incentivise behaviour. Some tax reliefs can be difficult to classify because they have more than one objective and include elements of both tax expenditures and structural reliefs”.
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