3. Personal Taxes - Income Tax

Question 1

Non tax advantages share options at
1. Grant
2. Exercise
3. Disposal of shares

Answer 1

1. No tax
2. Income tax charged & class1A & Class 1 if readily convertible into cash
   Mv@ exercise date less cost of shares or options
3. Capital gain
   Sale proceeds less MV @ exercise price = chargeable gain

Question 2

Tax advantages share options
1. Grant
2. Exercise date
3. Disposal of shares

Answer 2

1. No tax
2. No tax
3. Capital gains
   Sale proceed - cost of option or shares = chargeable gain

Question 3

Examples of tax advantages schemes

Answer 3

SAYE, CSOO, EMI AND SIP

Question 4

CSOP
1. Participation
2. Max value
3. Exercise period
4. Base cost of shares for CGT
5. If own more than 30% of the company ?

Answer 4

1. Employer chooses
2. £30k per employee
3. 3-10 years
4. Price paid
5. Excluded from the scheme

Question 5

EMI
1. Participation
2. Max value
3. Exercise prison
4. Base cost

Answer 5

1. Employee chooses
2. £250k per employee scheme is max £3m
3. Upto 10 years
4. Price paid plus discount

Question 6

SAYE
1. Participation
2. Max value
3. Exercise period
4. Base cost

Answer 6

1. All employees
2. £500 per month
3. 3-5 years
4. Price paid

Question 7

Share incentive plan
1. Participation
2. Free shares amount max
3. Partnership shares
4. Matching shares
5. Dividends
6. Holding period
7. Base cost of shares

Answer 7

1. All employees
2. Awarded max 3.6k per year
3. Bought lower if 1.8k or 10% of salary = allowable deduction agains employment income
4. Awarded max 2 per partnership share
5. Tax feee if invested in further shares
6. 5 years = exempt IT & CGT
   3-5 = IT & NICs
   Less than 3 = IT & NIC
7. MV when withdrawn from plan