Government urged to abandon cap on share options

Government plans to put a ceiling on the tax-free value of company share option schemes could damage employment in the UK, according to a leading IT entrepreneur.

Robin Saxby, CEO of chip company, ARM, has opposed the government's plans to cap the amount an employee can gain tax free from share option schemes since they were announced in the last budget.

In an exclusive video interview with Silicon.com, Saxby argues that if you want to motivate the best brains in the business and gain access to staff with the most experience, paying the highest salary doesn't always get results. Instead ARM, like many US high-tech start-ups, has always had a policy of rewarding value to the company through share schemes.

"ARM's main reward to its staff is through share options - we don't pay the highest salaries. And the idea is that if we want the best engineers, the best brains, we want to motivate them and if they give value to the company then they make money out of it," he said.

If these schemes are devalued, Saxby believes Silicon Fen will lose out on new investors: "If there is a problem for a US company wanting to set up in the UK in the same way as it does in the US, it'll put its R&D lab in Seattle rather than Cambridge. And clearly there is a potential problem for employment here," he claimed.

In contrast, John Whiting, tax partner at PricewaterhouseCoopers, said. "Employees still can't get a serious slice of the action with these proposals and we have to encourage the government to take a few more steps."

For the full interview interview with Saxby, see the Processors Channel (http://www.silicon.com/processors ).