This is a complex question with further questions that make it more complex.
There are lots of little rules that go along with ER relief that can trap someone not careful. You should NEVER sell a company and do buy outs etc without getting a qualified accountant and/or chartered tax advisor. Do it wrong and it’ll cost thousands in tax which stretch much further than just the simple sale. Tax planning is key here and you need to give the full history for any advice to be relevant.
Now just to start with ER relief. The rules have changed 6 April 2019 so be careful what you read:
Must be claimed within 1 year of the anniversary of the tax return (31.01.22 for 2019/20)
Must have a 5% holding
The person selling must have worked for at least 24 months and held the shares for 24 months of the company.
The company must be a trading company. Non trading assets won’t count - like investments. There is a 20% substantial extend rule.
EMI options will also qualify for ER relief.
So will the director have held the shares in the company he sells to for 2 years or worked for them? I’m not sure I even understand the scenario.
SIPS are held in a trust and are only for quoted companies. They have numerous restrictions and must be available for all employees. THey must be held for over 5 years to have no tax issues
CSOPS will unlikely not qualify for ER relief as options are restricted to £30,000 and you will likely fall foul of the 5% ER rule. Options must be held for over 3 years to avoid tax issues.
EMI’s are the most popular - but they are specifically banned from all kinds of trades including accountancy and legal firms. Gross assets must be under £30million, have under 250 employees and noone can own more than 30%.
Way too much hear for a forum. Go find a decent tax advisor.