Under the Enterprise Management Incentive scheme (EMI) employees can be granted options for shares in your company. Employee commitment can be rewarded through the growth in value of the shares for which options are held, with the resulting capital gain, potentially, taxable at the lower rate.
EMI and the Share Incentive Plan (SIP) are tax efficient incentives that can be packaged to attract and retain the right people for the future of your company, at a cost the company can afford. Even the potential national insurance contributions liability on the growth in value of SIP shares during the option period can be attached, by consent, to the employee.
Employers can also offer shares free of tax and NIC to new employees. Such employees are termed ‘employee shareholders’, and their contracts of employment reflect a reduction in employment rights such as the loss of redundancy rights and a number of other changes. When the employee disposes of the shares, the capital gain will be tax exempt up to a limited amount.
We welcome the opportunity to discuss an employee share ownership strategy, whether for individual employees or for the entire workforce.
There are several schemes under which tax reliefs or tax deferrals are available for investment in new and growing businesses:
- The Enterprise Investment Scheme allows income tax relief (30%) and CGT deferral, plus a tax exemption for any increase in the value of the investment after an initial three-year retention period
- The seed enterprise investment scheme (SEIS) offers income tax reliefs of 50% provided the investment is in a qualifying company and the shares are held for three years from the date of issue. Venture capital trusts offer income tax reliefs (30%) and the opportunity to pool investment with others looking to invest in qualifying companies
- Social Investment tax relief (SITR) offers income tax relief of 30% to investors in qualifying social enterprises, plus a CGT deferral and tax exemption on the investment provided held for at least 3 years. SITR is also available to those providing loan capital to qualifying enterprises.
The rules and tax breaks for each scheme are different, and do tend to change from time to time, but please discuss the options with us if you are thinking of attracting outside investors. SEIS is for those willing to invest in very young companies.
The tax exemption for trading companies and groups on the sale of shareholdings of 10% or more in trading companies may also encourage corporate investors. If you are aiming to bring new investment into your company, you will need to have a very clear idea of why the investors should choose your company, and what they can expect to get out of it. You will need to have a comprehensive business plan, with supporting financial forecasts to put before potential investors or lenders.
Investment & Related Laws
The Gambia Investment & Export Promotion Agency Act 2010 and Regulations 2012 are the main law governing investment in The Gambia. The Act and Regulation provide guidance on investing in The Gambia and clearly indicate the priority sectors for the country, guarantees to investors, investment incentives eligibility criteria, procedures, the institutional framework and answers to questions that investors usually consider in making an investment decision.
Below are other laws and regulations that impact on businesses in The Gambia:
- Environment Act 1994
- Value Added Tax Act 2012
- Business Registration Act 2004
- National Environment Management Act – NEMA 1994
- Hazardous Chemicals and Pesticide Control and Management Act 1994
- EIA Guidelines
- Environment Quality Standards Approved