This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Sale of options with cash and/or loan notes as payment

I Hate Tax!
Posts:1
Joined:Wed Aug 06, 2008 3:43 pm

Postby I Hate Tax! » Wed Sep 27, 2006 10:22 am

Hello!
My employer has granted me a number of options under the EMI scheme over the last 3 years in different tranches. The compnay was recently sold and we have the option to receive cash and/or loan notes (redeemable in 2yrs).

I would very much appreciate some guidance on how a "mix and match" scenario would work. Basically I would like to exercise some options now in cash and have the remaining amount in loan notes. But I was told that the last two tranches of options granted are "pooled" and the shares are pro-rated to the portion of cash/loan notes that I decide to take. Unfortunatley I do not quite follow this and would be grateful of an example that outlines this.

many thanks

hashman
Posts:1277
Joined:Wed Aug 06, 2008 3:31 pm

Postby hashman » Thu Sep 28, 2006 4:41 am

I'm not clear about the pooling point but in general you have 40 days (from the date your employer became a subsidiary of another company) in which to exercise your scheme options without losing the tax benefits. Any gains realised on taking cash will be liable to CGT - if the options were granted 2 years or more ago then full 75% BATR will apply. If 1 year then 50%. If you take loan notes this allows you to defer the CGT liability until you redeem the loan notes - but you need to obtain advice on whether these are QCBs or non-QCBs as the taper relief rules apply differently depending on what tpye they are.


Return to “Capital Gains Tax, CGT”