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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, I was granted EMI share options which were exercised

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I was granted EMI share options which were exercised and immediately sold in 2012/13.
I'm trying to understand the transitional arrangements that seem to be provided FA 2013.
While teh shares were held short period the options had been held for > 1 year.
As far as I can see it is possible to make an election on the relevant tax return (2012/13) as the shares were not held year and were sold pre April 2013.
Is it possible to make this election now as it is possible to amend the 12/13 return online.


Can you tell me exactly when the EMI option was granted and exactly when it was exercised please. You mention an election. Are you referring to entrepreneurs' relief?

Customer: replied 3 years ago.

Sorry - yes I was referring to entrepreneurs relief.

The options were granted in 2010 and exercised 6/4/12.


Did you have or sell any other shares in the same company that were not EMI shares?
Customer: replied 3 years ago.

No. They were all EMI and no other shares existed at the date.

They were sold in exchange consideration (cash), some other shares (which have not been sold) and some loan notes.


Leave this with me while I draft my answer.

I'm afraid that you will only qualify ' relief and the 10% rate of CGT of EMI shares after 5 April 2013 as you can read here. The HMRC manual has information on this here.

The election you referred to is only relevant purpose of identifying shares held in the same company that were not EMI shares and that were disposed of in 2012/13. The government introduced legislation to allow normal share identification rules to be bypassed by the making of an election by the taxpayer so that shares disposed of in 2012/13 were deemed not be the shares acquired through an EMI share option.

I realise this is not the answer you wanted to read. Let me know if you have any further questions.
Customer: replied 3 years ago.

Thanks advise and I think that makes sense.

I suppose your comments above are what this is referring to:

The legislation on this has been a classic dog's breakfast.

Where shares are acquired through an EMI option from 6 April 2012, the legislation relaxes the 5% rule and changes the 1 year holding period to start from the date the option is granted. However, it only applies to disposals after 5 April 2013.

Even if you could have made the election, the time limit was 31 January 2014 and the one year period from 31 January 2014 to the 2013 tax return does not apply to the election in this case. See under election procedure here.

Look under "Share Reorganisations" here to see if the lower rate of CGT could apply to the shares you received in addition to the cash which won't qualify.
Customer: replied 3 years ago.

I think this is what I had understood re. the time limit of 31/1/14,

I guess what I was trying to understand was whether it would have been an option (if I had a time machine).

I think the answer is no? While irrelevant just interested..

What I was trying to understand is whether the transition arrangements relaxed the 6/4/2013 date that this would apply from i.e. i held the options > 1 year.


These rules have beaten alot of professionals and take some understanding.
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