Investment reliefs and employee share schemes continue to be popular amongst businesses, so it is crucial to ensure you have considered every angle and are aware of the potential tax implications arising from these. 

Tax elections where employees / directors subscribe for shares

We see a continued appetite for corporates to gift or transfer shares to family members, directors, or employees. There are tax implications of these types of transactions – for example, certain exemptions that exist for a specific type of transfer; tax elections such as a s431 election that should be considered; and reporting requirements for both the recipient and the company. A quick chat ahead of such an event with a member of our Entrepreneurial Taxes team can make a real difference.

Employee share schemes

HMRC-approved share schemes continue to enjoy significant popularity within our client base, in particular Enterprise Management Incentives (EMI) and Company Share Ownership Plans (CSOP).

Agreeing the valuation with HMRC and getting the options granted is always seen as critical, but there are notification (EMI) and annual reporting (EMI / CSOP) requirements that are also vital to ensure that tax advantaged status is secured for the option holder. It also makes a future due diligence exercise a lot more straightforward.

Our team at Johnston Carmichael responded to HM Treasury’s call for evidence in relation to whether the EMI regime effectively supports high growth companies.  We await the Government’s response and possible further announcements in October’s Budget.  

Investment reliefs

If you are looking to raise funds, you may have heard of the Seed Enterprise Investment Scheme (SEIS), the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) relief.

These are tax reliefs that can benefit an individual subscribing for shares, when a company meets certain qualifying conditions. The best time to think about these reliefs is before you undertake the raise. Our Entrepreneurial Taxes team has significant experience in supporting clients in structuring to allow them to benefit from the relief, in explaining the qualifying conditions, and in making sure that any tripwires are navigated.

Get in touch

Our specialist team is on hand to help you maximise your tax position. Don't hesitate to get in touch with me or another member of our Entrepreneurial Taxes team.