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EMI options: proposed extension of entrepreneurs' relief clarified by HMRC
Practical Law UK Legal Update 9-518-7390 (Approx. 3 pages)
EMI options: proposed extension of entrepreneurs' relief clarified by HMRC
by PLC Share Schemes & Incentives
| Published on 29 Mar 2012 • United Kingdom |
HMRC has published further details of the 2012 Budget proposal to extend entrepreneurs' relief from capital gains tax to disposals of shares acquired under EMI options.
The 2012 Budget included news of a proposed extension of entrepreneurs' relief (ER) from capital gains tax to disposals of shares acquired under EMI options (but only if the shares are acquired on or after 6 April 2012). The amending legislation is expected to be in Finance Bill 2013.
HMRC published additional details about this proposal on 29 March 2012, including a clarification of which ER qualifying requirements will be relaxed for EMI option shares, and which will be maintained. This was not made clear in the 2012 Budget documents.
ER is currently only available on disposals of company shares:
- By officers or employees of the company (or a group member) who hold at least 5% of the ordinary share capital and voting rights and have met all of those requirements for at least one year before the disposal.
- If the company is a trading company or a member of a trading group.
HMRC has now confirmed that of these, only the 5% holding and voting requirements will be relaxed. It is intended that the other requirements will be maintained, including the one year employment and holding period.
For more information about the 2012 Budget announcement, see Legal update, 2012 Budget: EMI options: increase in individual limit and extension of entrepreneurs' relief to EMIs. For more information about EMI options, see Practice note, EMI (enterprise management incentives) options. For more information about entrepreneurs' relief, see Practice note, Entrepreneurs' relief: overview.