Taper Relief on EMI Share Options

markdavey

Hi,

A bit of advice (or rather confirmation of what I already believe). I was granted options under my employers EMI share scheme on 29/6/2004. I am able to exercise these options now. My understanding of the Taper Relief system is that the EMI Options form a Business Asset and are therefore eligible for Taper Relief as follows: -

If held for between 1-2 years 50%
If held for over 2 years 75%

The start date for the Taper is the date when I was granted my options not when I exercise them therefor I will have held them for over a year now.

Is someone able to confirm whether the EMI options form a Business Asset and therefore qualify as above?

Thanks in advance,

Mark Davey

telly-addict

All the detail is in this part of the IR website:


http://www.hmrc.gov.uk/emi/itniccgt.htm

confirming that taper runs from the date of grant of the options and whether they are business assets depends on:

Shares that you get by exercising an EMI option will be business assets provided that

• they are in a company that is a trading company or the holding company of a trading group and
• you are an officer or an employee of the company, its subsidiary or a qualifying joint venture company.

TCGA 1992 Sch A1 para 4 gives the full requirements for shares to qualify as business assets and para 5 for other assets. Your employer will be able to tell you if they qualify as business assets as their tax advisers will have checked this.

If they are business assets then if held for 1 complete year after 5/4/98 then 50% of the gain is chargeable and 25% if 2 or more years.

markdavey

telly-addict wrote:

All the detail is in this part of the IR website:


http://www.hmrc.gov.uk/emi/itniccgt.htm

confirming that taper runs from the date of grant of the options and whether they are business assets depends on:

Shares that you get by exercising an EMI option will be business assets provided that

• they are in a company that is a trading company or the holding company of a trading group and
• you are an officer or an employee of the company, its subsidiary or a qualifying joint venture company.

TCGA 1992 Sch A1 para 4 gives the full requirements for shares to qualify as business assets and para 5 for other assets. Your employer will be able to tell you if they qualify as business assets as their tax advisers will have checked this.

If they are business assets then if held for 1 complete year after 5/4/98 then 50% of the gain is chargeable and 25% if 2 or more years.

Thanks very much telly-addict, That's what I thought

mrnguyen

extract from :

http://www.hmrc.gov.uk/shareschemes/emi-new-guidance.htm#8





How much Capital gains tax is due and when is it payable?

From 6 April 2008, CGT is payable at 18 per cent. This is chargeable on all gains above the annual exemption. Taper relief is no longer available to reduce the amount of the chargeable gain. CGT is payable on 31 January after the end of the tax year in which the shares are sold.




given that i am holding shares that i exercised my emi options
is it means

1. taper relief not applied at all

OR

2. as my understanding of the above paragraph, taper relief is applied to the gain before 6 April 2008. and whatever gain after 6 April 2008, taper relief will not be apply.

please explain



thanks

trevormax

There is no taper releif any more. It ended in the 07-08 tax year as the govoernment wanted to introduce a simple flat rate system. Capital gains are now charged at a flat rate of 18% unless you qualify for etrepreneurs relief which came into effect on 06/04/08. I do not think you qualify however.

The annual allowance is still available and in the 08-09 tax year is £9,600 i believe.

mrnguyen

thank you!