Higher income earners will be assessing the Budget with mixed feelings.

The chancellor’s proposal to increase to increase national insurance contributions by 1 per cent means many will be paying thousands of pounds in extra tax. However, many tax specialists had expected Gordon Brown to raise NI contributions even further.

Some had suggested Mr Brown might even abolish next year’s ceiling of £30,940, which would have penalised higher-rate tax payers much harder. At the same time, Mr Brown has also acted to help senior company executives by softening the capital gains tax regime they face on shares they own in their own companies.

Since 2000, higher rate taxpayers were only entitled to pay a 10 per cent tax rate on shares held by them in their companies for four years. The chancellor announced he will be halving this time limit to two years for so-called business assets - which include shares and exercised share options.

Tax experts stress that CGT taxpayers do not receive more money as a result of this reform. But they will be able to dispose of shares they own much sooner. If options are granted, they could exercise them after two years instead of waiting twice as long in order to minimise their CGT liabilities.

Non-business assets, such as shares held in other companies, will continue to face a 40 per cent tax rate for two years, tapering to 25 per cent after 10 years.

Nic Cicutti

• Name: Matt Barrett
  
• Company: Barclays Group
  
• Title: group chief executive
  
• Age: 57
  
• Salary: £1.8m
  
• Extra NI payable in 2003-04: £18,570
  
• Shares owned (and value at today’s share price): 26,089 (£5.99m)
  
• Share options: 78,368
  
• Exercise price of options: £13.9m
  
• Potential CGT payable @ 10% after two years: £1.39m
  

• Name: Jonathan Bloomer
  
• Company: Prudential
  
• Title: group chief executive
  
• Age: 47
  
• Salary and bonuses: £1.1m
  
• Extra NI payable in 2003-04: £10,110
  
• Shares owned (and value at today’s share price): 152,623 (£1.13m)
  
• Share options: 235,079
  
• Exercise price of options: £1.4m
  
• Potential CGT payable @ 10% after two years: £137,000
  

• Name: Steve Morrison
  
• Company: Granada Media
  
• Title: chief executive
  
• Age: 54
  
• Salary and bonuses: £344,000
  
• Extra NI payable in 2003-04: £3,390
  
• Shares owned (and value at today’s share price): 676,669 (£880,000)
  
• Share options: 1,3830,918
  
• Exercise price of options: £6.8m
  
• Potential CGT payable @ 10% after two years: £680,000
  

Potential CGT payable @ 10% after two years: £1.93m

• Name: Sir Niall FitzGerald
  
• Company: Unilever
  
• Title: chairman, Unilever plc
  
• Age: 56
  
• Salary and bonuses: £1.9m
  
• Extra NI payable in 2003-04: £19,200
  
• Shares owned (and value at today’s share price): 9,961 Unilever NV (£405,000); 73,156 Unilever plc (£420,000)
  
• Share options: 6,472 (Unilever NV); 48,360 (Unilever plc)
  
• Exercise price of options: £3.9m l Potential CGT payable @ 10% after two years: £395,000 (assumes Unilever NV options not subject to CGT)

National insurance contributions based on latest reported income, brought forward to 2003-04 tax year. Salaries as stated in each company’s last annual report and accounts, including bonuses and other taxable benefits. Shares owned and options figures, source: Inbucon-meis Group, human resource consultants. Options calculations based on number of options granted, multiplied by price at which they can be exercised

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