Share Options Scheme

CSOP SIP
Qualifying Restrict to Key employees only Must be open to all
employees
Maximum total £30K Free = £3.6k pa
Value at grant Partnership =£1.8k pa (max 10% salary)
per employee
Matching 2:1
Conditions No discount at Grant Hold for atleast 3yrs (except partnership
Exercisable ≥3 yrs and ≤ 10 yrs shares)
And 5 yrs for maximum benefit
If own >30% of company =excluded from
scheme
Tax treatment No Income Tax or NIC No Income Tax or NIC on issue of free or
at Grant matching shares

Partnership shares are purchased out of

income, no income tax on dividends used
to buy partnership shares
Tax Treatment No Income Tax or NIC If withdrawn in 3 yrs, Income Tax and class
at Exercise 1 NIC is payable, based on the MV when
withdrawn.

If withdrawn 3-5 yrs,

Income Tax and class 1 NIC is payable,
based on lower of:
(1) MV when first awarded, and
(2) MV when withdrawn from the SIP

If withdrawn after 5 yrs, no Income tax/NIC

Tax treatment Normal Capital gain based on proceeds If withdrawn after 5 yrs, no CGT
at disposal less exercise price
If withdrawn within 5 yrs,
£
Proceeds X
Amount taxable
at withdrawal (X)
Taxable Gain X
 Principal Private Residence
- At any time, an individual could hold one PPR. Gain arising on PPR will be exempt according to
following:

- PPR exemption = Gain x period of occupancy (actual + deemed)

Period of ownership

Deemed Occupancy:

- Is that period of absence which is considered as period of occupancy for tax purposes. Following
are the deemed period of occupancy:

1. 3 years for any reason

2. 4 years for working within UK
3. Any period for working abroad (employment)
4. The final period of ownership of a main residence is always treated as a period of
ownership. This period of exemption is 09 months. (unconditional)

Note: It is compulsory for the individual to occupy his/her residence both before and after the
period of absence to claim exemption under first three points above. (At least one month
occupancy)

- PPR is not available on business use of property

Letting Relief:

letting relief is only available where a property is let out and the property owner is in shared occupancy
with the tenant.

It would not be available if whole property is let out.

Letting relief is the lower of:

(a) The amount of the total gain which is already exempt under the PPR provisions
(b) The gain accruing during the letting period (the letting part of the gain)
(c) £40,000 (Maximum)
Gift With Reservation:

It is a gift, where;

- Legal ownership of asset transferred to donee / transferee

But
- The donor / transferor retains some benefits in the gifted asset

Simply means, where the risks are rewards are still retained by the transferor, is gift with reservation.

Examples:

- Father gifted a house to son with condition like → Father would be living in house or if son
rented the house, then father would be benefited with rental income, not the son

- Father gifted share to son → but right to receive dividend not transferred to son

- Father transferred Bank a/c to son → but son is not entitled to receive any interest income

Treatment of Gift with Reservation (GWR)

2 Possibilities, either;

Reservation still in place when donor dies Reservation lifted before donor dies

1. During Lifetime (Original Gift)

1. During Lifetime (Original Gift)
PET / CLT → calculated according to the concept of
PET / CLT → calculated according to the concept of
“Diminution is Estate” at time of transfer
“Diminution is Estate” at time of transfer

2. At Death Time
2. At Death Time
Asset was in reservation of the donor at death time, so
Asset’s reservation lifted before the death of donor,
that asset would be added to estate calculation at
Reservation lifted date → would be consider as
Probate Value as normal…..
Deemed date of PET/CLT
(original PET/CLT date would be ignored)
(PET / CLT are ignored then)
IHT on GWR is responsibility of done/giftee IHT on GWR is responsibility of donee/giftee

Another Important Point:

If donor is paying commercial rent for the use of GWR, then it would no longer be considered as GWR.
Transfer of Going Concern:
- There is no VAT charge if a business (or a separately viable part of it) is sold as a going concern to another
taxable person. Such a sale is outside the scope of VAT.

- Transfer should be on going concern basis

(No major break in operations of the business)

(The buyer will (majorly) continue the same business as before

- If a transfer of a going concern (TOGC) is from a VAT registered trader to a new owner who is not VAT
registered then it is possible to apply to transfer the registration number of the previous owner to the
new owner