Tax 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...
Read moreTax Bite – Share buybacks – Update A company purchase of own shares, or buyback, is a popular way of implementing corporate succession, but is not without tax challenges and risks. Corporate lawyers will be familiar with the company law rule that a buyback cannot include deferred consideration. Most will also be aware of the basic tax rule that the proceeds of a buyback from an individual (above...
Read moreIn this Tax Bite, we look very briefly the often-overlooked loans to participators rules. These rules are something to be aware of whenever you are dealing with a close company, which in broad terms is a company that is controlled by five or fewer “participators” (i.e. shareholders and their associates). If a close company makes a loan to a participator, and the loan remains outstanding 9 months...
Read moreTax Bite - Employee Ownership Trusts The Employee Ownership Trust (“EOT”) legislation was introduced in 2014. Since the news of a possible rise in CGT rates at some point in the relatively near future, more business owners have been looking to achieve an exit and as a result EOTs are currently on a lot of people’s radars. As a headline, the CGT relief afforded to shareholders is hard to ignore –...
Read moreTax Bite – Section 431 Elections In this Tax Bite, we give you a refresher on section 431 elections, with a focus on practical points and tips for transactions. Background – what are s431 elections and what do they do? Almost all shares acquired by a director (including a non-executive director) or employee of a company will be employment-related securities for tax purposes, bringing them within...
Read moreTax Bite – Temporary extension to trading loss carry-back rules – implications for deals We noted in a previous Tax Bite that the Spring Budget on 3 March 2021 included proposals for a temporary increase in the carry-back period for trading losses in response to the impact upon businesses of the COVID-19 pandemic. In certain circumstances the carry back period has been extended to the three...
Read moreTax Bite – Stamp Duty on inserting a new holding company This Tax Bite follows on from our Bite of 24 June, covering topical tax issues on demergers. As we explained in that Bite, there is a stamp duty relief, known as section 77 relief, which can apply where a new holding company is placed on top of an existing company / group, which is typically the first step in a demerger or other...
Read moreTax Bite – Spring 2021 Budget The Budget delivered yesterday did not produce any of the immediate tax shocks that had been feared in light of the effect of the Covid-19 pandemic on the country’s finances. In particular, no immediate increases in tax rates were announced, and business asset disposal relief (previously entrepreneurs’ relief), whilst having been severely curtailed in the 2020...
Read moreThere was no Autumn Budget this year so it is now likely that any major tax changes will not be announced until 2021. This seems like welcome news for those rushing to get deals done ahead of the Budget in case of increases to the rates of CGT. However we would sound a note of caution in that the Chancellor’s CGT review is ongoing and is covering many areas including:- • chargeable gains on...
Read moreAs the country faces economic uncertainty, which may mean some businesses look to restructure or refinance their debts, we thought it would be helpful to outline the rules around when individuals and trustees can get tax relief for debts that may be, or become, irrecoverable. We will not touch on lending between companies in this Bite, which was the subject of a recent Tax Bite and is available...
Read moreWith all businesses more focussed at this time on cash reserves and potentially faced with having to make difficult decisions about their people, we are finding that companies are thinking about EMI options and the ability to reward employees with equity based awards. They are being used as an alternate remuneration strategy for example to compensate staff for temporarily taking a lower salary or...
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