April Question and Answer Section
Newsletter issue - April 2014
Q. I've recently made a gain of £62,000 by selling the shares I acquired through EMI options issued by my employer. Does that big gain push me into a higher tax bracket for income tax? What tax should I expect to pay on the gain?
A. The gain made in 2013/14 by selling the shares you acquired through the EMI share option scheme may qualify for entrepreneurs' relief and thus be taxable at 10% after deducting your annual exemption of £10,900. However, entrepreneurs' relief will only apply if you were still employed by the company at the time you sold the shares, and the period between the grant of the share options and the date you sold the shares was at least 12 months.
The amount of the gain in 2013/14 will not affect the top rate of income tax you pay for that tax year.
Q. I am a member of the APM (Association for Project Management) and my company pays my membership fees to the APM on my behalf. Does this payment have to be reported on the form P11D? If so, do I pay tax on the membership fee?
A. If your company does not already have a "dispensation" from reporting P11D business expenses for 2013/14 it could apply for one by 5 April 2014 using form P11DX or on the HMRC website. That dispensation will cover payment of the APM fees as the APM is on HMRC's approved list of professional bodies.
If the dispensation for 2013/14 is not acquired the APM fee should be reported on the form P11D for that tax year. You should then enter the P11D figures on your 2013/14 tax return and make a claim on the same return to set the APM membership fee against your taxable earnings. As a consequence of that claim on your tax return you should not pay tax on the membership fee.
Q. Can my company make regular donations to charity and receive tax relief for those gifts?
A. Yes, if your company is making a profit it can make charitable donations and get relief against corporation tax. It should claim the total donations made in the accounting period on the corporation tax return for that period. However, the deduction of donations cannot change a taxable profit into a loss, or increase a taxable loss. In those cases there is no tax relief for the donations. Although, if your company is part of a group of companies, the relief for the excess donations may be passed to another member of the group.
The recipient charity cannot claim gift aid relief on the company's donation.