Exemptions Flashcards
BADR (Business Asset Disposal Relief)
For individuals on following disposals:
Sole trader
Partnerhship interest
Shares in a trading company which is the individuals personal company (5% owned for at least 2 years), must be an employee or officer.
Cannot include any investments
Results in 10% CGT
EMI (Enterprise management incentive)
Shares acquired via enterprise management incentive share options. No need to own 5%, ownership is from grant date.
Qualifies for BADR
Investor Relief
New ord. shares in an unlisted trading company (or holding company of a trading company), which were subscribed for by the individual making the disposal
And. Issued on or after 17 Mar 2016. Must be held for at least 3 years.
Cannot be an employee or officer of company.
10% rate with £10m lifetime limit
EIS Relief
Individual disposes of a chargeable asset and invest in an Enterprise Investment Scheme (EIS) shares, the gain of the asset can be deferred.
EIS shares must be issues between one year before and 3 years after disposal. Can claim either the amount of gain or the amount for shares.
EIS relief deferred gain
Becomes chargeable when:
Shares disposed of by investor or investors spouse
Investor becomes non-UK resident within 3 years of share issue (or spouse)
EIS shares cease to be eligible for relief
SEIS relief
If an individual disposes of any chargeable asset and subscribes for a qualifying Seed Entherprise investment scheme in the same year.
Deferral of either
50% of gain matched with the amount invested or amount specified in claim. Can use either amount (to use AEA)
Claim must be made within 5 years from 31 Jan following the end of the tax year the shares were issued.
SEIS relief withdrawal
Disposal within 3 years of acq’n
If shares are not disposed of at arms length (gifted / under value) then all relief is withdrawn
Disposed of at arms length, restricted to 50% of consideration received
Substantial shareholding exemption
All or part of shareholding is exempt
Conditions:
Holding 10%
Held for 12 months out of last 6 years
Must be a trading company or holding co of trading co
Non-advantaged share schemes
No tax at grant date
Exercise date = income tax at MV (at exercise) date less exercise price
Disposal = CGT = Proceeds less MV (at exercise)
Tax-advantaged share schemes
No tax at Grant or Exercise.
Disposal = CGT = Proceeds less cost
Company share option plan (CSOP)
Must be exercised between 3 and 10 years of grant, employee can be granted up to £30k (MV at grant)
No income tax or NIC on grant date
Sale of shares = CGT
Enterprise management incentives (EMI)
A qualifying entity can grant employees share options worth up to £250k each (max of £3m for entity)
Company can set targets to be achieved
Can me at discounted prices
No tax at grant
No tax at exercise unless issued at a discount (tax on the lower of the MV at grant -actual paid, and MV at exercise - actual paid)
CGT on disposal
Share incentive plan (SIP)
SIP buys shares and holds them on behalf of the employees.
No tax when issued.
Taxed when shares removed from plan
>5 years = no IT or NIC
3-5 years = IT and NIC on the lower of MV at award and MV at withdrawal
<3 years = IT and NIC charge based on MV at withdrawal
No charge for CGT if sold immediately when taken out. Charge when shares increase in value after withdrawal from plan
Temporarily non-UK resident
If an individual is UK resident for more than 4 years and then becomes non-UK resident for a period of less than 5 years then returns to be a UK resident any CGT disposals are chargeable at point when resident again
UK resident tests - automatic overseas test
Order: Auto overseas, Auto UK, Sufficient ties
Two automatic not are included in tax tables.
Works full time overseas and not in UK fore more than 90 days
