A caring sharing Budget?

A somewhat varied range of issues on shares was promised in the Budget:

•  To encourage the market in shares of smaller companies, the abolition of Stamp Duty on shares listed on AIM and similar markets from April 2014.

•  A consultation was announced on the possibility of capital gains tax relief on the sale of a controlling interest in a business into an employee ownership structure and on further incentives in this area, including measures targeted at employees through indirect ownership models.

 •  The new employee owner status (shares being given in exchange for relinquishing employment rights) has been improved by providing an exemption from income tax and national insurance on the first £2,000 of value and an exemption on exit for the first £50,000 of gains. It is good news but the measure has not yet proved popular.

•  Very good news on share options under the Enterprise Management Incentive Scheme (EMI) – the 10% rate of tax available under entrepreneurs’ relief will apply to shareholdings of any size acquired under EMI options and the option period will count towards the 12 month ownership requirement. 

•  The relief to provide incentives for share investments in new companies, the Seed Enterprise Investment Scheme (SEIS), is very generous with 50% income tax relief and exemption from tax on gains on exits after three years.  For 2012/13, gains could be deferred against the cost of shares and such deferred gains themselves became exempt after three years. This deferral relief was due to end on 5 April 2013 but the relief has been extended (only for 50% of the deferred gain).