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I have been asked to participate in a Management Equity

Customer Question

Hi
I have been asked to participate in a Management Equity Incentive Scheme.
What are the UK tax implications of such?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The following advice, which I suggest you should read carefully, can be found below. It is from Ellenoff Grossman & Schole LLP: http://www.crowdfundinsider.com/2013/06/16641-how-the-uk-uses-tax-relief-to-boost-entrepreneurs/ Basically there are two systems: 'The EIS program allowed for investors to reclaim 30% of income tax by an approved offering. So within the limit of £1 Million, the 30% could add up returning potentially £300,000 of income tax for a UK investor.' There is no Capital Gains Tax (CGT) involved in EIS. The Seed EIS is a newer programme: 'Tax relief up to 50% of the cost of the shares is available for investors. One example of how the program works is as follows:A person invests £20,000 in the tax year 2012-13 (6 April 2012 to 5 April 2013) in SEIS qualifying shares. The SEIS relief available is £10,000 (£20,000 at 50%). Her tax liability for the year (before SEIS relief) is £15,000 which she can reduce to £5,000 as a result of her investment' Capital gains in a year which are invested in SEIS fall outside the CGT bracket. Also, if held for 3 years there is no CGT liability on disposal. There would appear substantial tax benefits in these schemes, but you may well be advised to consult a local Independent Financial Advisor before taking participating.. I do hope that I have been able to shed some light on the possibilities.
bigduckontax, Accountant
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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