JSOP (Joint Share Ownership Plan) & Tax/Tax Credits

UnahaClosp

Hi there :-)

I was wondering if anyone knows about JSOP (Joint Share Ownership Plans)? The umbrella company that I work for has paid me partly through PAYE and the remainder via JSOP dividends. It is my first year in this type of employment, and I want to make sure that I inform HMRC of the correct figures for Tax Credits - and also whether I owe any further tax (I believe it's Capital Gains Tax).

I have tried to contact the payroll team at the umbrella company, but they aren't responsive; I only have till tomorrow to inform Tax Credits of my earnings this year.

I am very confused as to what is considered profit, and what is considered earnings. My P60 shows £8274.20 for the year against a 1000L tax code. I have recently received my statement of shareholding from the payroll company, this shows A & B shares, brought and sold, and gain. I personally had nothing to do with purchasing or selling the shares, it all happens under the umbrella company and its (Hong Kong based) payroll companies control. They appear to advance me loans to purchase the shares over the year, and then sell all the shares back again at the end of the year, with a Capital Gain of £8554.90. The B Shares were disposed of at the same value they were purchased, so £0 Capital Gain.

“A” Shares previously held 0
“A” Shares purchased 134 £12,681.76
“A” Shares sold 134 £21,236.66
“A” Shares still held 0
Capital Gain/Loss £8554.90

“B” Shares previously held 0
“B” Shares purchased 11 £ 208.21
“B” Shares sold 11 £ 208.21
“B” Shares still held 0
Capital Gain/Loss £0

Would anyone know whether I declare the total amount of the shares sold, or the profit to tax credits (or some other), and secondly if I need to inform HMRC seperately about the dividends - and if so the profit or the total amount?

I'm sorry if it's waffly or confusing, I've tried to be as clear and concise as possible.

Thanks in advance for any advice!

xylophone

I think that you may have to check your situation with HMRC - see

http://www.hmrc.gov.uk/manuals/eimanual/eim45000.htm

UnahaClosp

Thank you for your quick response :-)

Would you suggest it is better to ring them? I'm not sure if they consider giving advice, or if they feel I should contact some form of professional adviser.

Kind Regards

xylophone

They won't give advice on how to arrange your tax affairs but they should be able to tell you how the income arising through the JSOP affects your tax credit calculation - I suspect that a member of a specialist team may have to be consulted?

agrinnall

If the £8554.90 is your only capital gain in the year then it's below your allowance (£11000 for 2014/5) and you'll have no tax to pay. Not sure whether you'd still need to declare it though.

Dead_keen

You are playing with fire.

You are taking part in an aggressive, perhaps abusive, tax avoidance scheme. You don't understand how it works. And you don't understand the risks.

HMRC will find out and will almost certainly come after you asking for more income tax and national insurance.

You might want to have a look on the contractors forum where this has been discussed recently.

I know I sound quite harsh answering this but you should not touch this with a barge pole.

In terms of tax credits, I have no idea. But my guess is that HMRC may try to treat the whole of the gain you have made as income for tax credit purposes because they would say the scheme does not work. That may take them a bit of time though.

But if one of the so called 'advantages' of this scheme is to increase the ability to get tax credits then they could just as easily say that you have deprived yourself of income that you would otherwise have received by taking part in the scheme and then treat you as having received this.

I'm not experienced enough to know what you would tell the tax credits people. And to be honest I doubt if any tax credit people that you talk to would be able to understand the implications of what you are saying anyway.

xylophone

And to be honest I doubt if any tax credit people that you talk to would be able to understand the implications of what you are saying anyway.

Which is why I suggested that a specialist would almost certainly need to be consulted - possibility of "disguised remuneration"?

Dead_keen

I'm not arguing with you. But my guess is that Part 7A won't be relevant because they will have structured the loan as coming from the employer, If not, the OP is doubly screwed. So I think it will be wider than DR and that the specialists would need to come from ESSU and SAV.

UnahaClosp

Thanks for your replies, I appreciate your thoughts.

As the reason that I was asking is that I felt it seemed a little odd when I finally got my end of year P60 and dividend certificate through, I phoned HMRC yesterday to ask their thoughts. As xylophone said, they are getting a specialist to contact me within the next 48 hours. I don't wish to fall foul of HMRC, I want to make sure that I'm paying what I should be.

As Tax Credits have to be informed by today, I have told them the total amount of the shares sold, as well as my P60 amount - this total was slightly lower than my estimate which I gave them last year so hopefully won't affect our tax credits too much. If it turns out that I need to change that figure, then that won't be a problem.

Once HMRC give me an answer, I'll post it here for information.

I had a look at the contractors forum - thank you Dead Keen - when I joined the umbrella company I am with, it had HMRC approved written all over it, so I thought I wasn't doing anything wrong. If this turns out not to be the case, then I'll be disappointed to say the least; moreover I doubt I'll have any form of recourse. I was informed by the company that this will be the last year of operation in it's current form, and that I will need to sort out a Ltd. company to continue with them before the end of this year.

Thanks again for taking the time to answer me, appreciated!