How to minimise tax on a work long term incentive award

[gf15]

Hi All,
I received a long term incentive share award. The scheme was over 3 years. On the 3rd year anniversary, over 40% of the shares were sold in March to cover the tax + NIC liability, with the balance of shares transferred into a share account. My tax alowance and rates were all over the place last year.

I plan to complete my self assessment soon and was wondering if there is a way to recover some of the tax paid?

I would be happy to put it in a sipp or existing private pension or gift it.
Any advice would be welcome.
Thanks in advance.

[supersport]

Put in a pension, that’s what I do. There is no other way to recover the income tax.

[Welshbeef]

supersport said:

Put in a pension, that’s what I do. There is no other way to recover the income tax.

But that’s capped at £40k for tax rebate.

[modeller]

If the shares were sold in March I think you missed the boat - tax year ended April 5th, so you needed to do something before then.

[LeoSayer]

Welshbeef said:

supersport said:

Put in a pension, that’s what I do. There is no other way to recover the income tax.

But that’s capped at £40k for tax rebate.

And it tapers down to £10k for very high earners.

The good news is that you can carry forward unused pension contribution annual allowance from the previous 3 years.

Details here:
https://www.which.co.uk/money/pensions-and-retirem...

The most efficient way to get the relief is via salary sacrifice however the relief you get will be based on your current tax rates, not whatever rate you paid in previous years.

[CharlesElliott]

I doubt very much that his employer would redirect vesting shares to a pension but that's a question for his employer.

Pension allowance now tapers down to £4,000 for very high earners, it was £10,000 in the 2019-2020 tax year.

[Carbon Sasquatch]

CharlesElliott said:

Pension allowance now tapers down to £4,000 for very high earners, it was £10,000 in the 2019-2020 tax year.

But they also increased the threshold - so some people restricted to £10k previously can now put in £40k. I understand they did that as NHS consultants were turning down COVID related overtime.

For OP - the shares have been treated the same as income - and taxed accordingly. Why would you think you can reclaim tax that has been paid ?

Sure, you can sell the shares & use the cash to fund pension contributions - but that's slightly different,

There will also be a nominal purchase price for the shares - and they will be further subject to CGT if they do well......

Edited by Carbon Sasquatch on Saturday 8th May 20:13

[supersport]

Welshbeef said:

supersport said:

Put in a pension, that’s what I do. There is no other way to recover the income tax.

But that’s capped at £40k for tax rebate.

So ??

What else can you do to recover the income tax paid. The OP doesn’t say how much so £40k may be enough with previous years taken into account.

If it’s not enough it’s better than Han a kick in the bks

[gf15]

Thanks all, pension it is.

[LeoSayer]

anonymous said:

[redacted]

Thanks for correcting me.

[Welshbeef]

supersport said:

Welshbeef said:

supersport said:

Put in a pension, that’s what I do. There is no other way to recover the income tax.

But that’s capped at £40k for tax rebate.

So ??

What else can you do to recover the income tax paid. The OP doesn’t say how much so £40k may be enough with previous years taken into account.

If it’s not enough it’s better than Han a kick in the bks

LTIPs in my experience have been director titled and even then not necessarily all. Salaries in my experience have been £160k and upwards - doesn’t mean that’s the case exclusively.

[NickCQ]

Next time someone sets up an LTIP for you, get professional advice at the outset and try to get as much as possible treated as capital gains rather than income. Google "sweet equity"...

[gf15]

Thanks all.
I am seeking professional advice, as I have some more pending.
Gf15.