I am highlighting a small point, of restricted interest to those involved with employee share schemes, but one which suggests that standards may not be what they were at HMRC.
Last month, HMRC published a revised Helpsheet 287 on the topic of the CGT consequences of disposing of shares acquired under a tax-advantaged employees’ share scheme. (https://www.gov.uk/government/publications/employee-share-and-security-schemes-and-capital-gains-tax-hs287-self-assessment-helpsheet/hs287-capital-gains-tax-and-employee-share-schemes-2025). This has excited some interest, as it clarifies how, by arranging for shares to be transferred directly from an SAYE share option scheme or a SIP into an ISA or personal pension arrangement, individuals may avoid triggering a liability to capital gains tax. However, it goes on, in para 16, to suggest (as did earlier helpsheets) that relief from CGT is available to both employees and non-employees who sell shares in an unlisted company to the company’s SIP trustees:
“This relief is designed to encourage shareholders disposing of their unlisted shares to sell them to the trustees of the company SIP for the benefit of all the employees of the company. You do not have to be an employee to claim it.”
There follows a note of how to claim the relief.
To the casual reader, this appears to be an attractive prospect, enabling any individual or corporate shareholder in an unlisted company to avoid CGT by selling their shares to SIP trustees.
What it fails to highlight is the key condition for the relief (which is afforded by s236A and Schedule 7C, TCGA 1992), namely that the SIP in question must hold/acquire (including shares awarded to, or acquired on behalf of, plan participants as Free, Matching or Partnership Shares) not less than 10% of the issued share capital of the company.
In practice, the relief (a form of CGT rollover relief, as the proceeds must be reinvested) is of very limited application, and certainly not as readily available to all and sundry, as the Helpsheet suggests. It is as if an officer at HMRC only read the first para of Sch 7C TCGA and did not bother to read the conditions in paras 2 and 3.
At best, it is hardly fair to “dangle the carrot” of relief from CGT without signalling that the detailed conditions mean that it is of only limited interest or application. “Help” is not what this is!
David Pett, Tax Barrister 