Employees can opt for shares to avoid bonus payment tax

Personal tax rates have come down drastically since the bad old days of the 1970s and 1980s. The current top tax rate of 46 per cent still applies on all income in excess of £10,000, but the tax-free allowance has increased from £2,000 back in 1986 to £3,150 today.

Nevertheless, for Mr H, who recently received a bonus payment of £1,500 from his company, having to pay £791.25 of it to the Government is something he would like to avoid in the future. It wasn't too long ago that this issue was addressed on these pages by Mr Jim Ryan, who runs the personal financial services division at Ernst & Young. Mr Ryan detailed the share option schemes available to employees of both large and small companies.

Mr H should ask his company's financial director to investigate such Revenue-approved schemes.