Self Assessment - simple questions...

[breamster]

Apologies for asking some very simple questions regarding the completing the self assessment tax return but I would imagine I'm one of many people that struggles with this each year!

1) I have some share options through my company. Essentially I bought x shares at 85% of their value. The company is floated in the US. Value (before covid!) was about £8-9K. What do I declare regarding these in my self-assessment? If it makes a difference I have no intention to sell these for a good many years.

2) Taxed UK interest I just derive from my bank statements. I have no ISAs (don't ask!). I assume interest on UK bank accounts will all be gross? Total interest will be minimal. <£100.

3) Child Savings I have two accounts for my kids with F&C. I have 'tax certificates' for these accounts showing ~£150 of dividends  and "Tax deducted at source" of ~£20. Do I declare these on my self assessment. These accounts are for the benefit of my kids only. Dividends have been reinvested and have not come to me?
 
4) National Trust Gift-Aided - I understand I can declare my NT membership as a charitable donation. Is this correct?

Thanks in advance! 
P.S. Higher rate tax payer if it makes a difference. PAYE. I'm only on self-assessment due to the rules around child benefit.

[CharlesElliott]

breamster said:

1) I have some share options through my company. Essentially I bought x shares at 85% of their value. The company is floated in the US. Value (before covid!) was about £8-9K. What do I declare regarding these in my self-assessment? If it makes a difference I have no intention to sell these for a good many years.

It depends. I assume it is an approved scheme, in which case you don't need to declare it at all but you need to check the plan documentation. If you have to hold the shares for a certain number of years before you are allowed to sell them, then that's a good indicator that it is an approved scheme.

breamster said:

2) Taxed UK interest I just derive from my bank statements. I have no ISAs (don't ask!). I assume interest on UK bank accounts will all be gross? Total interest will be minimal. <£100.

Most banks, around now, will product an interest summary for the tax year. But yes, you can derive it from your statements. There is probably no tax taken off but that should be clear on your statements.

breamster said:

3) Child Savings I have two accounts for my kids with F&C. I have 'tax certificates' for these accounts showing ~£150 of dividends  and "Tax deducted at source" of ~£20. Do I declare these on my self assessment. These accounts are for the benefit of my kids only. Dividends have been reinvested and have not come to me?

Don't need to include these. It's income for your children.
 

breamster said:

4) National Trust Gift-Aided - I understand I can declare my NT membership as a charitable donation. Is this correct?

Yes.

[StanleyT]

CharlesElliott said:

breamster said:

4) National Trust Gift-Aided - I understand I can declare my NT membership as a charitable donation. Is this correct?

Yes.

I thought you couldn't claim charitable "Gift Aided" payments as the charity is claiming the tax back on your behalf when you Gift Aid. If you stick a tenner in a blind dog for the guides then you can claim tax back on that as you haven't Gift Aided it?

[bogie]

StanleyT said:

CharlesElliott said:

breamster said:

4) National Trust Gift-Aided - I understand I can declare my NT membership as a charitable donation. Is this correct?

Yes.

I thought you couldn't claim charitable "Gift Aided" payments as the charity is claiming the tax back on your behalf when you Gift Aid. If you stick a tenner in a blind dog for the guides then you can claim tax back on that as you haven't Gift Aided it?

they only claim back basic rate tax, if you are higher rate tax payer you get tax relief on the remainder of the tax you have paid on your charity contributions

[LC23]

The share plan could be a US ESPP. If so it is unlikely to be UK approved and the under value you acquired the shares at should have been reported via your payroll. You must check the plan type with your employer and they should provide confirmation on your UK tax and NIC treatment.

[Eric Mc]

Why did you think the questions were simple?

[breamster]

Eric Mc said:

Why did you think the questions were simple?

I was hoping!

Thanks all to everyone's replies. It seems I don't have all the answers yet but at least I know what questions to be asking about the share options.

Cheers.

[Mark V GTD]

Suggest that going forward you think about finding an accountant to complete the return for you. A one man band operation will charge you around £500 and save you more than that because of their better understanding of the system.

[Eric Mc]

Mark V GTD said:

Suggest that going forward you think about finding an accountant to complete the return for you. A one man band operation will charge you around £500 and save you more than that because of their better understanding of the system.

The correct answer.

[The Leaper]

breamster said:

Apologies for asking some very simple questions regarding the completing the self assessment tax return but I would imagine I'm one of many people that struggles with this each year!

1) I have some share options through my company. Essentially I bought x shares at 85% of their value. The company is floated in the US. Value (before covid!) was about £8-9K. What do I declare regarding these in my self-assessment? If it makes a difference I have no intention to sell these for a good many years.

.

You say share options but you then say that you bought them at 85% of their value. I think you are confused. I think that you did not have share options but what you have is a company sponsored share purchase plan, which is not the same as share options.

Assuming that I am right and these are shares in a USA company quoted in the USA, it is unlikely that the plan is approved in the UK. This would mean that any financial advantage at the time that the shares are available for purchase (eg the value of a discounted share purchase price) will be subject to UK income tax. Usually this is dealt with via PAYE for the relevant month. This and all other features should be explained by the company when inviting you to participate in the share purchase plan.

You say that you have purchased the shares. There's two situations when you will have a subsequent liability for UK income tax. The first is when dividends are paid. These dividends will arise in the USA and will be subject to a tax deduction in the USA before payment to you. This is known as withholding tax. If you are not resident in the USA and not liable for USA tax you should register as a non resident alien for USA tax purposes and complete USA IRS form W-8BEN (renewable every three years). By doing so, withholding tax is significantly reduced, so you get a higher net dividend payment to you in the UK. And when you complete the UK self assessment foreign income pages you must show the gross amount of dividend due to you and you can show the amount of withholding tax paid in the USA so it reduces you UK income tax burden on that gross amount.

The second is when you come to sell the shares. As a non resident alien for USA tax purposes, when you sell there is usually no USA tax to pay. However, the amount received is subject to capital gains tax in the UK. This means that you will need to calculate any CGT liability, which is quite complex but the HMRC website has good examples of how to do this. Note that the GCT allowance for the current tax year is £12,300 so there's no CGT to pay if the capital gain is below this amount. Note too that there's no requirement to report to HMRC any gain or transaction if the total amount realised by all the sales in a tax year does not exceed four times the CGT allowance ie £49,200 for this current tax year.

One thing I strongly recommend is that you keep full details of all transactions in the company sponsored share purchase plan ie you contributions, tax paid via PAYE regarding the plan, all dividend receipts and all sales receipts. In time you will learn about such important UK tax subjects as a "section 104 holding" and if you don't have historical details it will be a nightmare to get all of your tax affairs correctly submitted and the right tax paid. Remember, it is your responsibility, and nobody else's, to get your tax matters reported correctly and the right amount of income and capital gains tax paid on time

I hope you consider this to be a simple answer to what you describe as a simple question.

R.

[The Leaper]

breamster said:

 
4) National Trust Gift-Aided - I understand I can declare my NT membership as a charitable donation. Is this correct?

.

Just to be precise, and as I understand these things, you can record your NT subscription/donation under the gift aid rules but to do so you must have completed the NT gift aid forms at the time you made the payment, and retained a copy. If not, you will not be able to claim the payment as gift aided when completing self assessment because you did not do so at the time of payment.

R.