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bigduckontax
bigduckontax, Accountant
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I paid a monthly contribution into a company Share Incentive

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I paid a monthly contribution into a company Share Incentive Plan for a number of years, the company was recently taken over by a private company and I had to sell my shares to them at a loss. Am I able to offset the loss against any PAYE liability?
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. Possibly, here are the general rules: You can offset, but the shares also need to qualify. If they weren't EIS qualifying shares, they need essentially to be shares in an unquoted (AIM = unquoted) trading company and they need to have been acquired by subscription which appears to be the case here. However, it all depends upon the Share Incentive Plan, If it wasn't an EIS scheme the situation may be more tricky.. The time limit is one year from the normal filing date. I do hope that I have shed some light on the position. You will have to take this up with your tax office with a view to your tax code being inflated to compensate for the loss incurred.
Customer: replied 1 year ago.
Many thanks, ***** *****'t see anything in the documentation that describes it as being EIS qualifying but it certainly had rules regarding the maximum amount of any contribution per month before NIC and PAYE and it also details any tax liability on shares sold within a 5 year period or disposed of under certain conditions, i.e. 'leaver' etc. The shares held were in a Plc and following the takeover the company was restructured and I was made redundant hence the question regarding my overall liability for the financial year rather than a coding adjustment.
Expert:  bigduckontax replied 1 year ago.
Right, I see your point. Chaddesley Sanford have a fuller explanation: 'Under what circumstances can I offset capital losses against income? You can offset capital losses arising on the disposal of shares you acquired by subscription in a qualifying trading company, or following a negligible value claim in respect of such shares (as covered in technical paper “Negligible Value Claims”). Shares acquired by subscription are shares issued directly to you from the company rather than purchased from another shareholder. The rules governing whether a company is a “qualifying trading company” are complex but broadly they cover: A requirement for the business to have undertaken it’s trade primarily in the UK from incorporation to the date of disposal / negligible value claim A requirement for the business not to have gross assets in excess of the limits in force at the time the shares were issued (from 6th April 2006 these limits are £7m before the share issue, £8m after) A requirement for the shares not to have been listed on a recognised stock exchange (or for there to have been any arrangement in place for such a listing) at the time they were issued A requirement for the company to have been carrying out a qualifying trade (certain trades such as dealing in land or investments are excluded) for at least 6 years before the date of disposal or for the entirety of its active existence if that is less than 6 years The rules that qualify a capital loss to be set against income are broadly the same as those which would qualify the initial share subscription for Enterprise Investment Scheme (EIS) income tax relief. Consequently losses arising on the disposal of such qualifying subscriptions automatically also qualify for income tax relief (assuming the EIS relief hasn’t subsequently been withdrawn).' From the tenor of your question you would appear to comply and should be able to offset your loss against income. I had shares in a company which went into liquidation, not my fault, and, since I was an employee, the total loss on my shares in the company, which had been subscribed for, was allowed against income. Please be so kind as to rate me before you leave the Just Answer site.
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
Expert:  bigduckontax replied 1 year ago.
And your kind bonus.

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