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41 Cards in this Set
- Front
- Back
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How does a company qualify as an EIS company? |
Unquoted trading company with a permanent establishment in the UK
Not a prohibited trade - financial trades, farming, market gardening, hotel and property development Less than 250 full time employees Assets must be <15m before and <16m after the share issue Cash used by the issue of shares must be used for the trade in 2 years |
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What are the implications to a person claiming EIS income tax relief? |
30% x amount subscribed up to 1m
Reduce income tax to nil (not a repayment)
Carry back to the previous year if not already exceeded
Must not hold > 30% of shares l, including connected people
Must own shares >3 years |
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What are the implications of selling EIS shares? |
Must be kept for >3 years or claw back is lower of - original tax reducer or 30% sale proceeds (if a loss)
No effect if should after holding > 3 years |
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How does a company qualify as an SEIS company? |
Unquoted trading company with a permanent establishment in the UK Not be a prohibited trade - financial services, farming, market gardening, hotel and property development Assets must be < 200,000 before issue Less than 25 full time employees Cash raised by issue of SEIS shares must be used in the trade within 3 years The qualifying activity must be a trade < 2 years old |
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What are the implications to a person claiming SEIS income tax relief? |
Receive 50% of amount subscribed Maximum 100,000 qualifying subscription Can only reduce tax liability to nil (not repayment) Can carry back subscription to previous year if the limit has not already been exceeded Must not have >30% of shares (including connected persons) or work for the company Must own shares >3 years to qualify |
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What are the implications of selling SEIS shares? |
If sold within 3 years claw back is the lower of - original income tax reducer or 50% x sale proceeds (only if a loss) No tax implications if kept > 3 years Can claim for loss to be offset C/Y or P/Y |
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How does a company qualify to be a VCT? |
Must be a quoted company Income must be derived wholly/mainly from shares Invests > 70% in shares in qualifying companies >70% of qualifying holdings must be in the form on eligible shares Cannot invest more than 15% of funds in any one company Must distribute >85% of its income Investment in any one company cannot exceed 5m |
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What are the implications to a person claiming VCT income tax relief? |
30% x amount subscribed Maximum 200,000 No carry back to the previous year Dividends on first 200,000 are also tax free |
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What are the implications of selling VCT shares? |
If sold within 5 years - claw back is lower of original income tax reducer or 30% x sale proceeds (only if a loss) Clawback if the company looses VCT status in 5 years No withdrawal if sold > 5 years |
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How does a company qualify to provide Social Investment Tax Relief? |
Must be: registered charity, community benefit society or community interest company Profits must be reinvested into the business or community Unquoted <500 full time employees Assets of <15m before investment and 16m after Not be under control of another company Only have 51% subsidiaries |
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What are the implications to a person claiming Social Investment tax relief? |
30% x subscruption/funds lent Up to 1m subscurption/funds All or part of investment can be treated as paid in previous year Held for > 3 years |
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What are the implications of selling social investment shares? |
Disposal < 3 years leads to all or some being clawed back |
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How does a company qualify as an SEIS company? |
Unquoted trading company
Not from a prohibited trade - financial, farming, market gardening, hotel and property development
Assets must be < 200,000 before share issue
< 25 full time employees
Cash raised by share issue must be used by trade within 3 years
Qualifying activity must be < 2 years old |
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How does a company qualify as a social enterprise company? |
Set up with social objectives and run primarily for the benefit of the company Unquoted Less than 500 full time employees Assets < 15 million before share issue and < 16 million before share issue Not be under control of another company Only have 15% subsidiaries |
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How does a company qualify as a VCT company? |
Quoted company
Income mainly from shares
Invests > 70% in shares in qualifying companies
> 70% qualifying holidays must be in the form of eligible shares
Cannot invest more than 15% funds in one company
Must distribute > 85% of its income
Investment in any one company cannot exceed £5 million |
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What are the implications to a person claiming SEIS income tax relief? |
50% x amount subscribed Maximum £100,000 Can carry back to previous year (if limit isn't already exceeded) |
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What are the implications of selling SEIS shares? |
If sold < 3 years claw back is the lower of: - original tax reducer - 50% x proceeds (if loss) No withdrawal if sold > 3 years Can be offset PY/CY |
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What are the implications to a person claiming VCT income tax relief? |
30% x amount subscribed Can reduce liability to nil No carry back to previous year Dividends on first £200,000 acquired are tax free |
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What are the implications of selling SEIS shares? |
If sold < 5 years Clawback is lower than: - original income tax reducer - 30% x sale proceeds (if loss)
Clawback also if VCT loses its approved status within 5 years
No withdrawal of income tax reducer if sold > 5 years |
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What are the implications to a person claiming social investment income tax relief? |
Cannot have > 30% of voting rights or loan capital Either subscribe for shares or lend money to the enterprise Maximum 1 million investment All or part can be carried back to previous year |
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What are the implications of selling social investment shares (disposal)? |
If disposed < 3 years relief is fully or partly withdrawn |
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Tax implications of non-tax advantaged share Schemes? |
Income tax charge:
MV at exercise less amount paid
Capital gains charge:
Proceeds less amount paid less charged income tax |
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Who is allowed to join the SIP scheme? |
All full time and part time employees must be given the option to benefit Unless they have less than 18 years of service |
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What conditions must a company meet in order to provide the SIP scheme? |
Unquoted Not controlled by another company |
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What types of shares can be awarded in a SIP? |
Free shares - £3,600 p/a Partnership shares - BUY lower of £1,800 or 10% of salary (Deduced from salary so pay less tax) Matching shares - 2 for 1 partnership shares Dividend shares - reinvest dividends into shares (Making dividends exempt from tax) |
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What capital gains changes arise on SIP shares? |
Only chargeable on increase in value of the shares between them beige withdrawn and sold Deemed cost - MV when withdrawn (If only withdrawn to be sold, no charge) |
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SIPs - what are the income tax implications of free shares? |
< 3 years - IT on MV at withdrawal 3 - 5 years - IT on lower or MV of allocation or withdrawal > 5 years - no IT |
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What are the NIC charges on SIP shares? |
Where there is an income tax charge Class 1 NIC will apply if they are readily convertible assets |
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SIPs - what are the income tax implications of partnership shares? |
< 3 years - IT on MV at withdrawal 3 - 5 years - IT on lower of amount used to purchase shares or MV at withdrawal > 5 years - no IT |
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SIPs - what are the income tax implications of matching shares? |
< 3 years - IT on MV at withdrawal 3 - 5 years - IT on lower of MV at allocation or MV at withdrawal > 5 years - no IT |
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SIPs - what are the income tax implications of dividend shares? |
< 3 years - Dividends used to buy shares become taxable 3 - 5 years - No IT > 5 years - No IT |
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What is a savings related share option scheme? (SAYE) |
Employees contribute a fixed amount each month into a SAYE account This is topped up by a tax-free bonus from the building society Funds are used to exercise options over employer company shares |
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Who must be able to contribute into a SAYE scheme? |
All employees with more than 5 years service must be given the option |
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What conditions must a company meet to provide a SAYE scheme? |
The company must usually be quoted |
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What are the details of a SAYE scheme? |
Can be granted at up to 20% discount The scheme must be 3, 5 or 7 years (if contract is taken out before 23 July 2013) Contributions between £5 - £500 p/m Employer can impose a max £10 Bonuses are a multiple of monthly contributions and are tax free No IT implications of grant or exercise CGT is difference between cost and sale proceeds |
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What are the conditions of a company share option plan? |
Doesn't have to be available to all employees Employees with more than 30% of shares cannot participate No discount can be given Max per employee is £30,000 (valued at date of grant) |
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Income tax implications of a company share option plan? |
No IT or NIC implications at exercise if made within 3 and 10 years of grant If outside of this time the charge is: MV @ exercise - option price And NIC will be charged (This is then deducted when looking at CGT) |
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CGT implications of a company share option plan? |
Pay CGT on difference between cost and sales proceeds |
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What are the conditions of enterprise management incentive schemes? |
Can give up to £250,000 to each employee Maximum for the company 3m Must not be a subsidiary Small trading company less than 250 employees Not prohibited trade -financial services, legal services, farming and property development Cannot join with more than 30% of shares |
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What are the income tax implications of an EMI scheme? |
Must be exercised within 10 years If a discount is given the income tax charge is the lower of: MV at grant MV at exercise Less: option price |
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What are the CGT implications of an EMI scheme? |
CGT is proceeds less amount paid and amount charged to income tax To get ER relief need to wait 12 months after grant |
