Share plans Flashcards
(25 cards)
For a non tax advantaged share scheme, how is it taxed?
Value at exercise less cost = amount treated as employment income
For a non tax advantaged share scheme, how is a capital gain taxed?
Sale proceeds less market value at exercise = gain
How much free shares can be awarded from a SIP?
£3,600 per annum
If shares are withdrawn from a SIP what are the rules for being taxed?
Less than 3 years - market value
3 - 5 years - lower of market value at date of withdrawl or market value at date of allocation
More than 5 years - no charge
How much partnership shares can an employee buy each year?
£1,800 (£150 per month)
What is the cap on the salary when calculating if they can buy partnership shares?
10%
Does an employee get tax relief buying partnership shares?
Yes, his salary is reduced by the amount he pays.
How are partnership shares taxed on withdrawl?
< 3 years - market value at date of withdrawl
3 - 5 years - lower of cost or market value at time of withdrawl
5 years plus - no tax charge
How many free shares can an employer match with partnership shares?
Two addtional free shares for every one partnership share purchased
How are dividends from SIP shares treated?
Taxed as normal if employee keeps the cash but if used to reinvest into more shares then completely free of tax
If dividend shares are withdrawn because the employee leaves, how are they taxed?
< 3 years - taxable in the year withdrawn.
More than three years - no tax or nIC
When is there no charge on a withdrawl from shares of a plan?
Injury, retirement, redundancy or death
What is the CGT implications of selling SIP shares?
Charged to CGT on the difference between price at sale and price at withdrawl - it is therefore imperative the employee sells as soon as they are withdrawn.
Who can participate in a SIP?
All employees, however the company can use its discretion on employees who have been with the company for less than 18 months.
What is the maximum discount that can be awarded in a savings related share option scheme?
20%
How is the bonus on a SAYE account taxed?
It isnt, its tax free
How is CGT calculated on SAYE?
Proceeds less purchase price.
Who cant participate in the CSOP scheme?
Part time directors working less than 25 hours per week.
Individuals with a material interest - holding more than 30% of share capital
WHat is the maximum value of shares that can be held in a CSOP?
£30,000
What are the tax implications of a CSOP?
Exercised between 3 - 10 years - no tax or NIC
If exercied <3 years or > 10 years, tax and NIC will be charged and the same rules as non tax advantaged schemes will apply
Qualifying conditions for an EMI scheme?
- Trading company with permanent establishment in UK
- Carry on a qualifying trade
- Gross assets must not exceed £30 million
- Total shares with options< £3m
- Company must not be controlled by another company
- Less than 250 full time employees
- Employee cant have material interest in company (< 30%)
- Individual options cant exceed £250,000
Tax implications of EMI?
No tax or NI if exercised within 10 years of grant unless the options are granted at a discount
How is the income tax worked out on a discounted EMI?
Lower of MV at grant or MV at exercise less price paid = employment income
What is the base cost of EMI shares if sold for CGT purposes?
Amount paid for shares plus amount charged to income tax at exercise (if they were discounted)
