Share options

There was also a boost to the Enterprise Management Incentive (EMI) share option scheme, which gives tax benefits to employees granted options to acquire shares in a small company.

A draft of the 2013 Finance Bill published on 11 December 2012 included a measure that will make it easier for employees exercising EMI options to pay capital gains tax at 10%, instead of 18% or 28%, on gains made when they sell their shares.

At present, to qualify for the 10% entrepreneurs’ relief rate, employees and directors have to hold at least 5% of the shares in the company for a year before selling them.

From April 2013 the minimum 5% shareholding rule will be removed and the one-year qualification period will start from the grant of the option rather than the purchase of shares. That means an employee will be able to accept a share option, hold it for a year, then exercise it immediately before selling the shares, and pay CGT at 10%.

In this edition

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice as at January 2013.