Have Tax Questions? Ask a Tax Expert for Answers ASAP
Last year I have 60 shares in the company (50% were paid out and 50% reinvested) I have now also received a further 60 shares, however I have only just singed the paper work and they will be added to my allocation in June.
Apologies I may have been unclear. I am part of an equity ownership scheme with my current employer. And as such receive equity/shares in the business.
The 29k last year was in relation to 50% of my equity being sold and the other 50% being reinvested in the company. I was under the impression (as advised from our FD) that the monies recieved last year are subject to CGT, I believe this would be around 5k, however I am keen to see if I can reduce this were possible?
Thanks.In order for 50% of your equity to be reinvested, it must have been paid out.The gain on the shares you sold will be based on what you paid for them and how the equity ownership scheme works. If your company has accountants and tax advisers, they will be far better placed than me to work out any gain which may be subject to CGT as the history of acquisitions and disposals will affect the calculation of any gain.There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year that the gain is made. The first £11,000 of gains an individual made in the 2014/15 tax year is exempt from CGT. To determine the rate of CGT you will pay for 2014/15, you need to work out which of the following scenarios fits your circumstances:1 If the sum of your income and the net taxable gain is £41,865 or less in 2014/15, then all the taxable gain will be charged to CGT at 18%.2 If your income alone is £41,865 or more in 2014/15, then all the taxable gain will be charged to CGT at 28%.3 If your income alone is less than £41,865 in 2014/15 but greater than £41,865 when the net taxable gain is added, then part of the net taxable gain will be charged to CGT at 18% and part at 28%.As you are a shareholder in your employing company you may be entitled to entrepreneurs' relief which you can read about here. If you are, then the CGT rate will be 10%.Take a look here for some information on employee share ownership schemes. One or none of those may be what your share scheme is based on.
I'm afraid that once the tax year has ended, there is nothing you can do to reduce your tax liabilities for that year.I hope this helps but let me know if you have any further questions.