Extracted from newspad

The UK’s 2024 Autumn Budget introduced changes to Business Asset Disposal Relief which have implications for the Enterprise Management Incentives (EMI) scheme.

First, the relief continues to allow people who qualify to pay a reduced 10 percent Capital Gains Tax on the sale of certain business assets, including shares, up to 5 April 2025. The lifetime limit will stay at £1m but the rate will gradually increase. It will stay at 10 percent for the rest of this 2024/2025 tax year, rising to 14 percent for the next tax year and then to 18 percent from the 2026/2027 tax year.

There is a risk that changes to CGT could significantly impact the position by reducing the annual exempt amount or by increasing CGT rates to align with income tax rates. Such changes would reduce the tax efficiency for employee shareholders as well as business owners, with to higher CGT on disposal.

A Treasury official has confirmed that there will be no carve-out for EMI, but that employee participants in EMI schemes will retain preferential access to the relief at the same rate as other users.

Employee share ownership is an important tool for both economic growth and productivity aims shared by the government. Accordingly, the Centre’s submission to the Treasury recommends that any change in capital gains tax or other taxes should be rebalanced to make sure that it did not adversely impact the benefits for employees.

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