Where a corporate seller is selling a business, instead of selling the business and assets directly to the buyer, a more attractive alternative can be to hive down the business into a (new or existing) subsidiary company, and sell the subsidiary company to a buyer. Hive-downs can be more attractive from a corporate seller’s tax perspective than a direct transfer of a business / assets to the...
Read moreWarranty and indemnity insurance is now a common feature in M&A deals. Sellers will typically anticipate at the outset that if the deal is backed by W&I insurance, their liability under the SPA warranties and Tax Covenant will be capped at £1. What is often not appreciated (sometimes by buyers and sellers alike) is that there will be a number of things that a Tax Covenant (and Tax...
Read moreEIS deferral relief/SEIS reinvestment relief: often forgotten The Enterprise Investment Scheme (EIS) is a UK venture capital scheme renowned for the generous tax reliefs it offers investors when investing in private companies. Along with its related relief (SEIS, for smaller start-up companies,) it provides income tax relief on the amount invested and a CGT free exit if all the conditions are met...
Read moreEMI options are the most attractive form of employee share incentives available, however they won’t always be available, for example where:The company is too big, in terms of numbers of employees or gross assets; The company carries on EMI-excluded activity or has investment activities; The individual is not a full-time employee; The individual already has £250,000 worth of EMI options, or...
Read moreOn 11 July 2023, the Finance (No 2) Bill 2023 received Royal Assent. This has given effect to a number of relaxations and increases in limits relevant to tax-advantaged share options and share investments: Enterprise Management Incentive (EMI) Options The requirement to include within the option contract details of any restrictions that apply to the shares no longer applies. As best practice, we...
Read moreThe deadline for employers to report events in relation to employment related shares (and other securities) and share options in respect of tax year 2022/23 is 6 July 2023. Most companies will know that if they operate an HMRC-approved or tax-advantaged share option / incentive scheme such as EMI, CSOP, SIP or SAYE, there is an annual reporting requirement in relation to events happening during...
Read moreTax Bite – Highlights of “Tax Day” – Stamp duty reform, and possible changes for EOTs? Last Thursday 27 April was “Tax Administration and Maintenance Day”, which involved the publication of various consultations and proposals on tax measures, and the promise of more consultations to come. Of most interest to those advising companies and their shareholders were: The announcement that there will be...
Read moreProperty Tax Bite – “Tax Day” – Possible reforms to the Construction Industry Scheme Last Thursday 27 April was “Tax Administration and Maintenance Day”, which involved the publication of various consultations and proposals on tax measures, and the promise of more consultations to come. Of most of interest to those advising on property tax matters was the publication of a consultation on proposed...
Read moreTax Bite - The Budget The Budget of 15 March was relatively benign in terms of major tax announcements for business but did have a few welcome highlights. There were no changes made to the headline tax rates – so corporation tax will still increase to 25% from 1 April for companies with annual profits in excess of £250k – and BADR was left untouched. Full expensing The main announcement for...
Read moreIn October, HMRC published its long-awaited (at least by advisers) guidance on the use of discretions in EMI options. There has been a long period of uncertainty, during which it was not clear in what circumstances HMRC would regard the exercise of a discretionary power in an EMI option contract as: Not affecting the tax-advantaged EMI status of the option; or A change to a fundamental term of...
Read moreTax Bite – EMI share valuations – HMRC’s latest approach In addition to the various tax advantages of EMI options, the ability to agree the market value of the option shares with HMRC is a very useful further benefit of EMI. If shares are simply issued/transferred outside of an EMI option, there is no ability to agree the share value with HMRC and shares in a private limited company are...
Read moreTax Bite - The "Mini-Budget" The "mini-Budget" of 23 September, or Growth Plan as it was badged, was less mini than most had been anticipating in terms of tax announcements. The reversal of the 1.25% increase in national insurance contributions was very much expected, and will take effect from 6 November this year. This will be joined in April 2023 by a 1% reduction in the basic rate of income...
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