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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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. I am completing my annual tax self-assessment and am unclear

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Hi. I am completing my annual tax self-assessment and am unclear what to declare on a share options scheme, which was registered with HMRC for Entrepreneur's relief on any CGT. This, as i understand it, is a tax avoidance scheme. The share options have not been exercised as of yet so there is no actual payment due, but the s/a references a 'penalty' if i do not declare a HMRC scheme reference number & (oddly) tell them which tax year exercise may take place. I do not have a crystal ball for the latter question, but i would like to understand why i would not just declare the scheme in the tax year in which it is applied to the share options i exercise. Can you advise? Thanks.


Are you referring to shares in your employer company that you will be able to buy under an Enterprise Management Scheme? When were you granted the options? When will you be able to exercise them?

Customer: replied 3 years ago.


Yes, it's an EMI scheme offered to senior executives only by my company, . Options were granted in July 2013, and can be exercised at any time in the event of a full sale or majority sale of the company's share capital, but (i believe) the Entrepreneur's relief on CGT only comes into play after 1 year, so that would have been July 2014. There is no current sale planned.

The company has (by the way) registered the scheme with HMRC and got approval of the valuations etc.

Everything appears to be done correctly, but i am just confused by the apparent need to declare in my s/a 2013-14.

Hope you can advise.



That's just as I thought. Only shares acquired through EMI options qualify for entrepreneurs' relief without the owner having to own 5% of the shares in the company.

The EMI share option scheme is not a tax avoidance scheme. It's a government approved way of rewarding employees and it has tax advantages. That doesn't make it a tax avoidance scheme.

You need do nothing until you exercise any of your options and only then if you sell a sufficient amount which requires you to disclose the gain in your tax return. Gains only need to be reported in a tax return if they exceed the annual CGT exemption which is currently £11,000 or the total disposal proceeds of all capital transactions is more than four times the annual CGT exemption , ie £44,000, regardless of whether you made any gains or not.

As for your 2013/14 tax return, you do not need to mention that you have been granted EMI options in that return.

I hope this helps but let me know if you have any further questions.
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Customer: replied 3 years ago.

excellent, rapid advice. just what i needed.

Thanks. Good luck with the shares.