saying he had got it wrong but there is a particular form of share option which instead of being subject to income

saying he had got it wrong, but there is a particular form of share option, which instead of being subject to income tax was only subject to capital gains tax.”He said it was not intended that women on supermarket check-out tills, such as Asda employees, should benefit from executive share option schemes when they were introduced.”Asda were about to introduce a scheme where pounds 6,000 of pay was income tax free. The intention was to deal with executives who were taking a disproportionate amount of the system. We have ended up by hitting our own people.”Refusing to back down, Mr Clarke said on BBC Radio: “I think it’s right Greenbury and his people had tax experts They spent some months studying this. I can assure them they got it right, even though they don’t seem to understand what they recommended.”I saw Mr Greenbury. Others warned it would alienate typical Tory voters.Bill Cash, a leading anti-Maastricht Tory backbench MP, said: “This is a classic banana skin. It doesn’t help to keep on saying ‘I know I was right to do this’ It was done at very short notice.

A Labour source last night said they would not vote against the Government. “We’re going to let the Tories stew in their own juice.”David Shaw, a right-wing Tory MP, and Lord Wolfson, chairman of the Next retail group, yesterday launched a pressure group, called the Campaign to Save Share Options, to force Mr Clarke to change his mind. However, there is a real threat of a Tory rebellion when it goes before the Commons in the autumn, if the Chancellor has not retreated. Kenneth Clarke was resolutely refusing to admit he had made a gaffe, and insisting he was going ahead with the plan to tax executive share options, in spite of it being disowned by Sir Richard Greenbury, whose committee on top salaries recommended the move.
Mr Clarke has told friends he believes the right wing is out to “get my head” for his support for keeping open the option of a single European currency. The share option debacle could be used to undermine his position.The Chancellor held a pre-Budget strategy meeting with Treasury ministers and officials at Chevening, the Foreign Secretary’s country retreat, yesterday to prepare the ground for possible tax cuts in November.The tax on share options is expected to raise pounds 80m in the next Finance Bill. The Chancellor was accused of slipping on a “classic banana skin” by right-wing Tory MPs yesterday as he faced growing pressure to reverse his decision to tax executive share options. The shares can be transferred into a personal equity plan, which has further tax advantages..

Employees are allowed to be given each year shares worth pounds 3,000 or 10 per cent of salary up to a maximum of pounds 8,000. The company gets corporation tax relief on the cost of buying the shares.If the employees leave their shares with the trust for at least five years, they are exempt from income tax but are subject to capital gains tax on any profits. When the shares are eventually sold, the profit is liable to capital gains tax, with a pounds 6,000 allowance.If the share price is lower than the exercise price, then the savings can be withdrawn, complete with bonus, and the options left to expire at no cost to the saver.The other scheme left in operation is profit-sharing – started in 1979 – under which 1,158 companies have set up trust funds to buy shares on behalf of employees. The advantage of paying capital gains tax on profits, before the Chancellor’s decision to impose income tax, was that the first pounds 6,000 was free of tax. Top income and capital gains tax rates are the same at 40 per cent.
The discretionary share option scheme was one of three similar arrangements introduced to encourage share ownership. The other two are to continue.In a savings-related share option scheme, started in 1980 and now used by 1,400 companies, employees can be given options to buy shares in their companies at a fixed price at least five years ahead.At the same time, employees each put between pounds 10 and pounds 250 a month into a Save as You Earn Contract with National Savings or a building society or bank, to produce the sum needed to pay for the shares.The savings contract adds a bonus equivalent to nine months’ payments after five years, giving a maximum of pounds 17,250 to buy shares – or a further nine months’ payments if the account is kept open another two years.If the share price is higher than the exercise price, the employee can exercise the options and pay for them from the savings account.

“But I have come out of it unscathed so far.”And not many people can say that less than 24 hours after appearing in the House of Commons in a pink shirt and red pinnie.. Share option schemes, encouraged by the Thatcher governments of the Eighties, have been around for years. Sir Richard chose not to wear his “If You Can’t Stand the Heat, Get Out of the Kitchen” apron and he remained seated, explaining to shareholders that he was about to have a hip operation.The questions came thick and fast.There was the woman who had flown in from Belfast to elicit from the pounds 809,000-a-year chairman an answer as to why her brothers found it simply impossible to buy lightweight turquoise trousers from M&S before their winter holidays.And there were the boys whose 13th birthday gifts of M&S shares entitled them to attend and ask why the company didn’t sponsor a Premiership football team.Sir Richard coolly dealt with his inquisitors before issuing a strong denial that the company had copied the swimsuit design, arguing that the expert who perfected the technique for dying the fabric had confirmed that M&S staff approached him about it before Ms Bruce did.Of his decision to chair the CBI committee into boardroom pay, he said he had no regrets, although he felt he had had a mauling by the press.”I threw one or two tantrums myself,” he said. “It isn’t usually like this,” said Audrey Amor, a shareholder and former employee from Loughton in Essex. “I expected a little bit of controversy over Sir Richard’s comments on share options, but nothing like this.”Inside the meeting, the atmosphere was cooler. The Environmental Investigation Agency with their 30ft blow up whales wanted to know why M&S buys fish from the Faroe Islands despite the islanders’ continued practice of slaughtering thousands of pilot whales.And the designer Liza Bruce, accompanied by the six scantily-clad models, wanted to know why the company was selling pounds 20 swimsuits that looked suspiciously similar to the designs she sells to a limited clientele for pounds 120. Yesterday, her lawyers issued writs alleging copyright, suggesting that they, too, would like a word in Sir Richard’s shell-like.Hundreds of shareholders filed in incredulously.

If it wasn’t the six models in the eye-popping bathing suits or the chanting eco-warriors with their inflatable pilot whales, then perhaps it was the scuffling photographers and security guards that made their trigger fingers twitchy.
They were at the Grosvenor House Hotel in London to protect the US delegation before their transfer to yesterday’s Bosnia talks, but the agents could have been forgiven for thinking they had already landed in a war zone. Unbeknown to US logistical planners, a normally sedate, deliberately dull event was sharing their hotel: the Annual General Meeting of Marks & Spencer.An occasion usually laced with anything but tension, nothing but worthiness and everything but controversy, the 1995 Marks and Sparks AGM could have been scripted by Sam Peckinpah and directed by Quentin Tarantino.Caught in the crossfire was Sir Richard Greenbury, the man hailed on Monday as slayer of the boardroom fat cats but castigated by Thursday for his U-turn on taxing share options.Outside the main hall, everyone wanted a word in his ear. The US secret servicemen with their Foster Grants and spaghetti earpieces must have wondered what the hell was going on. They “utterly repudiated” the allegations of corruption and said it was a “profound denial of justice” to be refused the right to put the evidence before a libel jury.. confident that the courts are powerless to restrain them, however false, however malicious, however damaging the allegations may be.”Mr Hamilton and Mr Greer said it was imperative for Parliament to reverse the judgment.Mr Greer said he was unable to use Parliamentary privilege to clear his name.