Enter to open, tab to navigate, enter to select
March 2015 Budget: share schemes and incentives implications
Practical Law UK Legal Update 6-605-1009 (Approx. 4 pages)
March 2015 Budget: share schemes and incentives implications
| Published on 18 Mar 2015 • United Kingdom |
The Chancellor, George Osborne, delivered the March 2015 Budget on 18 March 2015. This update summarises the key developments relevant to share schemes practitioners. (Free access.)
On 18 March 2015, George Osborne delivered his final Budget before the general election. As expected, there were very few announcements directly relevant to share schemes.
The most significant development is the announcement that the capital gains tax entrepreneurs' relief (ER) qualification rules are amended for disposals on or after 18 March 2015. This change is most likely intended to target "manco" structures under which executives would be directors of, and each hold 5% shareholdings in, a specially-formed company which in turn held growth shares representing 10% of the ordinary share capital of a trading company (taking advantage of the definition of joint venture in the ER legislation). This allowed the executives to qualify for ER, despite each of their shareholdings representing only 0.5% of the trading company’s ordinary share capital. (See March 2015 Budget, paragraphs 1.252 and 2.96, Overview, paragraph 1.39 and TIIN: Capital gains tax: entrepreneurs’ relief, joint ventures and partnerships.)
Other announcements that may be of interest to share schemes practitioners include:
- A review of the availability of ER for academics disposing of shares in university spin-out companies (see March 2015 Budget, paragraphs 1.189 and 2.96 and Overview, paragraph 2.22).
- For "knowledge intensive" companies, a change to the qualifying criteria for tax relief under enterprise investment schemes and venture capital trusts rules so that companies with fewer than 500 employees will qualify (see March 2015 Budget, paragraphs 1.200 and 2.75 and Overview, paragraph 1.8). The documents do not indicate whether this change will be extended to the enterprise management incentives (EMI) options legislation. [Practical Law note: since this update was published, the government has announced that this measure will not be included in Finance Bill 2015.]
- As announced in the 2014 Autumn Statement, amendments to the disclosure of tax avoidance schemes (DOTAS) rules include a requirement for employers to notify employees of avoidance schemes relating to their employment and to provide details of those employees to HMRC (March 2015 Budget, paragraph 2.207).
For details of key business tax announcements, see Legal update, March 2015 Budget: key business tax announcements.