CGT 19 - GCT & Employee Share Schemes Flashcards
CGT treatment of shares from a SIP….
CGT is only chargeable on the difference between the value of the shares at the date of withdrawal from the plan (the base cost) and their value at the date of sale. Hence CGT can be avoided by leaving the shares in the trust until sale.
For all other share schemes (other than a SIP), for CGT purposes, the base cost of the shares will be:
Amount paid by employee for the shares X
Plus: Amount(s) chargeable to income tax on acquisition of the shares if any (before relief for any employer’s NICs) X
CGT base cost X
BADR on disposal of relevant EMI shares ….
Where the disposal is of relevant EMI shares, the rules are relaxed. BADR will be available provided:
a. the option was granted at least two years prior to the disposal of the shares; and
b. for at least two years prior to disposal:
i. the company was a ‘trading company’; and
ii. the taxpayer was an officer or employee of the company
For employee shareholder agreements entered into from 1 December 2016….
no tax relief is available. CGT is chargeable on all gains accruing on disposals of shares and losses are allowable.
For employee shareholder agreements entered into prior to 1 December 2016…..
the CGT treatment depends on whether the shares are ‘exempt’ or ‘non-exempt’.
The first £50,000 of employee shareholder shares are exempt shares
When non-exempt shares are sold….
gains are chargeable and losses are allowable.
When exempt shares are sold, losses are….
The treatment of gains depends on the date the agreement was entered into:
When exempt shares are sold on or before 16.3.16 ….
After 16.3.16 (but before 1.12.16) …..
The CGT base cost is …..
never allowable
All gains are exempt
1st £100,000 of gains are exempt (lifetime limit)
the amount charged to income tax in respect of the shares. The first £2,000 of the value of the shares awarded was not charged to income tax where agreements were entered into before 1 December 2016.
