21st March 2012
This news item looks at the proposals announced by the Chancellor of the Exchequer in his Budget Statement which have an impact on employee share schemes, employee ownership and personal investments in companies.
The key proposals are as follows:
- The Chancellor has announced his intention to improve and reform the Enterprise Management Incentive scheme (EMI) by (a) providing additional support to start-up companies to assist them in being able to operate the scheme, (b) consulting on extending the scheme to academics who are employed by qualifying start-up companies, (c) extending entrepreneurs’ relief to shares acquired on the exercise of EMI options and (d) increasing the individual grant limit significantly from £120,000 to £250,000, subject to State aid approval. It is not yet clear how (a), (b) and (c) will work.
- The Government will conduct an internal review to examine the role of employee ownership in supporting growth and to consider ways in which barriers, including tax barriers, to its wider take-up could be removed. The review will also consider the findings of the work on employee ownership being led by the Minister for Employment Relations, Consumer and Postal Affairs, due to report in summer 2012, and will conclude ahead of Autumn Statement 2012.
- The Government will consider the recommendations of the Office of Tax Simplification’s review of tax-advantaged share schemes, and will consult on how to take these proposals forward in Finance Bill 2013.
- From April 2012, the EIS annual investment limit for individuals will be increased to £1 million. The qualifying company limits will be increased to companies with fewer than 250 employees, and the annual investment limit for qualifying companies will increase to £5 million under both EIS and VCTs, subject to State aid approval.
- From April 2012, the Government will introduce the new Seed Enterprise Investment Scheme (SEIS), providing income tax relief of 50 per cent for individuals who invest in shares in qualifying seed companies. The Government will also offer a capital gains tax (CGT) exemption where gains realised on the disposal of assets in 2012–13 are invested through SEIS in the same year.