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CGT holdover reliefs are available not only to trustees where funds are transferred to one of these funds from a qualifying ESOP127 but also to existing shareholders wanting to sell their shares to a new plan trust for the benefit of employees. |
Gains realised by the trustees are not normally liable to CGT.128 |
| 16A.6.5 The Partnership Share Plan129 |
Employees may buy shares out of their pre-tax monthly salary or weekly wages up to a maximum of £1,500 a year or £125 a month.130 There is also a maximum limit of 10% of salary,131 while another rule requires the employee to be informed about the possible effect of these rights on benefit entitlement.132 The rules give the employee a tax deduction for the sums spent on the purchase of the shares. The payments must be deducted from the employee’s salary.133 The plan may allow for money to be accumulated; if it does not the sum must be invested within 30 days.134 Sums may not be accumulated beyond 12 months. |
As the employee has paid for the shares there is no minimum period during which the shares must be retained and the employee will face no charge if the shares are left in the plan for 5 years. If shares are removed before 3 years have passed the employee must pay income tax on the value of the shares when they are removed.135 There is no deduction for the original price since it was tax free. If shares are removed between years 3 and 5 the |