RMH Associates
Business & Accountancy Services
Other Tax Notes
EMPLOYEE SHARE INCENTIVES Company Share Ownership Plans (CSOP) No tax charge when option granted under Inland Revenue approved CSO Plans. Options not to be granted at less than market value not to be exercisable within three years. Gains chargeable to CGT, unless in a PEP. Total value when issued not to exceed £30,000. Approved SAYE Schemes Savings Employees granted options to purchase shares with a maximum of 20% discount to market value. Employees can save a fixed monthly amount of between £5 and £250 for three, five or seven years. At the end of the savings contract a tax-free bonus is available. Employees use the proceeds of the savings contract, including the bonus, if they want to exercise the option. If they do not, the proceeds are repaid in cash, tax free. There is no tax or National Insurance charged on the discount or on the gain made when the option is exercised. Share Incentive Plans (SIP) Companies can give up to £3,000 worth of 'free' shares a year to each employee. Employees can purchase up to £1,500 worth of 'partnership' shares a year. This can be rewarded by the company giving up to 2 'matching' shares for each share an employee buys. Employees can also invest up to £1,500 out of dividends from the plan shares in 'dividend' shares. Your employer may include some or all of these elements in their plan. Pension scheme allowances 2007/2008 2008/2009 Permitted contributions -the higher of 100% relevant UK earnings or £3,600 £3,600 Annual contribution allowance
(100% of salary up to…)£225,000 £235,000 Lifetime benefit allowance £1,600,000 £1,650,000
Individual Savings Accounts (ISA) Income and gains on ISA investments are tax free 2007/2008 2008/2009 Overall maximum £7,000 £7,200 Maximum in Cash £3,000 £3,600 Maximum in Stocks and shares £7,000 £7,200 Charitable Giving Gifts of the following assets to charity qualify for income tax relief: Shares and securities listed or dealt in on the UK Stock Exchange, including the Alternative Investment Market. Shares and securities listed or dealt in on recognised foreign stock exchanges. Units in an authorised unit trust (AUT). Shares in a UK open-ended investment company (OEIC). Holdings in certain foreign collective investment schemes - broadly, schemes established outside the UK equivalent to unit trusts and OEICs. The whole of a beneficial interest in a qualifying interest in land and buildings. Such gifts will be exempt from Inheritance tax and exempt from Capital Gains Tax on any notional gain made. For Gifts made under Gift Aid, no minimum donation is required to obtain income tax relief. Payroll Deduction Scheme - no limit. Tax Shelters 2007/08 2008/09 Enterprise Investment Scheme (EIS) up to £400,000 £500,000 Income tax relief on EIS 20% 20% Maximum amount for EIS carry back £50,000 £50,000 Capital gains tax on EIS shares £Nil £Nil Capital gains deferral by EIS investment Unlimited Unlimited Venture Capital Trust (VCT) up to £200,000 £200,000 Income tax relief on VCT 30% 30% Tax on VCT dividends £Nil £Nil Capital gains tax on VCT shares £Nil £Nil Capital gains deferral by VCT investment £Nil £Nil Golden Handshake max. £30,000 £30,000