Unfair shares of the profits: Tax law on profit-sharing can penalise male pensioners. Neasa McErlean reports

DISCRIMINATION between the sexes is alive and well - and sometimes even thriving - under the endorsement of the Inland Revenue.

Unusually, however, the latest tax anomaly to come to light is one that favours women over men, and in certain circumstances, a female employee will find herself with a tax bill half the size of that facing a male colleague.

The problem revolves around government-approved company profit-sharing schemes, under which employees can acquire shares in the company in a tax-saving way. If the shares are kept in the scheme for five years, the employee will not be subject to income tax on their value.

Sometimes, however, employees leave the schemes early because they retire or are made redundant. To soften the potential tax liability, the Inland Revenue gives these employees more favourable treatment than others who quit schemes early. But a quirk of the legislation denies this benefit to certain male employees retiring early.

For schemes established after 25 July 1991, pensioners who leave schemes early will be subject to tax on only 50 per cent of the initial value of their shares. These schemes are required to have a common retirement age - and employees leaving will be taxed the same way regardless of sex.

But under pre-July 1991 schemes, employees are subject to tax on 100 per cent of the original value if they leave in the first four years. If they leave in the fifth year, they pay tax on 75 per cent of the original value.

Whatever the specified common retirement age which a company now operates under the scheme, it will find that, in the eyes of the Inland Revenue, men will be regarded as retiring at the age of 65 and women at 60, for the purposes of a scheme established before 25 July 1991.

Consequently, a man retiring before that age will be forced to pay tax on 100 per cent or 75 per cent of the original share values, while female colleagues retiring at the same age or younger would be taxed on 50 per cent.

Overnight, some male pensioners will find their nest egg has turned into a financial noose.

'The effect is inequitable,' says Nilgun Izzett of the law firm Theodore Goddard. 'If you are trying to be a good employer and ensuring people are treated equally, it's a little unfortunate if all your efforts are, in a sense, thwarted because of the Government's tax policy.'

(Photograph omitted)

Suggested Topics
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London