Share plan award - Employer NI allowable for CGT?

Share plan award - Employer NI allowable for CGT?

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A client has received an award of shares under a long term investment plan (not an approved plan) and under the terms of the plan he has to suffer the employer class 1 national insurance liability (as well as the employee NI and income tax). The income tax is calculated on the value of the shares less the employer NI liability. I just want to confirm that the employer NI liability will be allowable for capital gains tax purposes on a subsequent sale of the shares awarded, Can anyone point me to the relevant legislation?
John R

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By AnonymousUser
04th Apr 2007 17:27

Why?
I am not sure why you think the NICs should be deductible for cgt as such? They are deductible for income tax under the special rules whereby employer and employee can agree that employer can recover employer's NI on an event which is not within an approved scheme of some kind. Having suffered an income tax charge any CGT only arises by reference to the ultimate disposal proceeds less the value of the shares at the time of the income tax event. That value does not have to be reduced by the NI as far as I am aware. Note that there is a deadline within which the employee must effectively have reimbursed the employer to get the income tax relief of 60 days from the end of the relevant tax year.

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By User deleted
05th Apr 2007 11:19

Thanks
I was thinking of the CGT base cost as being the value of the shares less the employer's NI so I wanted to be sure that such NI could be added back to bring the deemed cost back up to the award value. I could not find any legislation or guidance specifically referring to this. However you seem to have confirmed my understanding of the position.

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