HC Deb 03 February 1989 vol 146 cc411-2W
Mr. Ian Taylor

To ask the Chancellor of the Exchequer what are the latest figures for take-up of profit-related pay; and if he will make a statement.

Mr. Brooke

Profit-related pay has just completed its first full year of operation, under the innovatory scheme for tax relief which my right hon. Friend the Chancellor of the Exchequer introduced. At the end of 1988, a total of 830 schemes were registered, covering well over 120,000 people.

The progress of PRP is encouraging, but experience has suggested that one of the rules has discouraged some employers from setting up schemes and complicated things unnecessarily for others. This is the rule that PRP should be at least 5 per cent. of total pay if profits are unchanged from the base year. The Government have therefore decided to abolish it.

I am authorising the Inland Revenue to operate an extra-statutory concession to this effect from today. This means that employers whose accounting years begin on 1 April will be able, if they wish, to register schemes before then without having to meet the 5 per cent. test. We shall put forward the necessary legislation in the Finance Bill.

This change should simplify considerably the operation of profit-related pay. I hope that it will help those who have already opted for PRP, and encourage others to follow in their footsteps. Full details of the changes are available in a press release published by the Inland Revenue today.