Tax Forum :: Free Tax Advice

I got EMI share options in a company. I have left a company and as such, exercised all of my vested options after leaving. Now, several months later this company is getting acquired by a large company and they are paying cash and assumed equity awards for company's outstanding shares, warrants and equity incentives on a fully-diluted basis.

I have been looking at how can I pay the tax once the acquisition has been completed and I have received a payment for my shares. I have been going through the GOV website which enables you to calculate CGT (https://www.tax.service.gov.uk/calculate-your-capital-gains/resident/shares/disposal-date). After completing the online form and entering all details, I can download the breakdown of everything including taxes I should pay based on the information provided. The page also provides an option to notify HMRC about my shares sale, so I can pay due taxes.

However, when entering the details on the website, there is no option to select or record that these are EMI shares. How can I notify HMRC about my share sale with ensuring that this is for EMI shares, and as such my CGT should be much lower?

Can anyone help or point me in the right direction?

All the info I have gone through:
https://www.gov.uk/guidance/submit-an-enterprise-management-incentives-emi-notification
https://www.gov.uk/entrepreneurs-relief
https://www.gov.uk/tax-sell-shares/work-out-your-gain

Why do you believe your CGT should be much lower?

You would've qualified for entrepreneurs relief if you still worked for the company. As you left, they are treated like any other shares for CGT purposes - i.e. no special entrepreneurs relief available.

Thank you for the reply.c

I do believe I should qualify for lower CGT based on the following (based on my understanding of The Finance Act 2000 as Amended by ITEPA 2003:
- I have left voluntarily on good gterms
- I have exercised all of my vested shares within 30 days after my leaving date

Am I correct?

Unfortunately not.

You are looking at the wrong legislation. There have been two transactions. Firstly the exercise of the options under ITEPA 2003. On sale it is a capital disposal and therefore you need to be looking at TCGA 1992.

Under s.169I (7A) to qualify for entrepreneurs relief, throughout the year before disposal the individual must be an officer or employee of the company unless condition D is met (TCGA 1992 s169I) which seems unlikely.

If possible, think about selling the shares in tranches and/or transferring to spouse before disposal. If you're talking large sums then get some professional advice.

Thank you AdamS93, appreciated. I've sent you a PM, please let me know if you have received it.