Tax on shares in your employer
Discussion
I work in the UK but for a company based in the US, and as we approach IPO the issue of tax on share options finally looks to be an issue worth investigating.
I don’t seem to be able to find a clear answer that I can fully understand. I am expecting to pay capital gains on them but had in my mind there was some notion that if you held shares in your employer for 4 years then they weren’t subject to tax.
Is this a complete fantasy that I have made up?
I don’t seem to be able to find a clear answer that I can fully understand. I am expecting to pay capital gains on them but had in my mind there was some notion that if you held shares in your employer for 4 years then they weren’t subject to tax.
Is this a complete fantasy that I have made up?
Your company will be able to advise, as the tax liability is different depending on how the shares are issued e.g. options, RSUs, share plan etc
https://www.gov.uk/tax-employee-share-schemes/empl...
I work for a US company and have had share options in early years and RSUs in recent years.
RSUs (restricted stock units) are treated like just extra salary as they are in effect just full shares gifted to you. You may need to fill out a W8BEN tax form for the US tax man otherwise he may take his cut of taxes before you get your hands on them. If they are held with an online broker eg. Merrill Lynch then you can do all this in their website.
In our scheme a percentage of the RSUs are sold to cover the tax liability up front and we just cash in the rest whenever we wish so long as the trading window is open and then the money is in the bank within a few days.
all this info is something your employers payroll or HR should really be briefing you on.....
https://www.gov.uk/tax-employee-share-schemes/empl...
I work for a US company and have had share options in early years and RSUs in recent years.
RSUs (restricted stock units) are treated like just extra salary as they are in effect just full shares gifted to you. You may need to fill out a W8BEN tax form for the US tax man otherwise he may take his cut of taxes before you get your hands on them. If they are held with an online broker eg. Merrill Lynch then you can do all this in their website.
In our scheme a percentage of the RSUs are sold to cover the tax liability up front and we just cash in the rest whenever we wish so long as the trading window is open and then the money is in the bank within a few days.
all this info is something your employers payroll or HR should really be briefing you on.....
Some years ago I had several grants from my employer's discretionary stock option plan. Later I had an option to purchase them after 5 years. In effect this meant that if the shares increased in value over the 5 years I purchased them and immediately sold the shares.
The employer was USA based and so were the stock options, administered by a USA bank. On grant I had no tax issues at all but on the sale I received the whole of the share value but was liable on the whole sum to UK income tax at the higher rate, payable I think by the following 31 January under self assessment rules. It was tempting to use the tax due to buy a Ferrari and own it for a few months but I decided that I should be risk averse so I placed the amount of the tax due on deposit at a good rate for a few months, then paid the tax when due, and later the tax on the interest.
R
The employer was USA based and so were the stock options, administered by a USA bank. On grant I had no tax issues at all but on the sale I received the whole of the share value but was liable on the whole sum to UK income tax at the higher rate, payable I think by the following 31 January under self assessment rules. It was tempting to use the tax due to buy a Ferrari and own it for a few months but I decided that I should be risk averse so I placed the amount of the tax due on deposit at a good rate for a few months, then paid the tax when due, and later the tax on the interest.
R
bogie said:
Your company will be able to advise, as the tax liability is different depending on how the shares are issued e.g. options, RSUs, share plan etc
https://www.gov.uk/tax-employee-share-schemes/empl...
I work for a US company and have had share options in early years and RSUs in recent years.
RSUs (restricted stock units) are treated like just extra salary as they are in effect just full shares gifted to you. You may need to fill out a W8BEN tax form for the US tax man otherwise he may take his cut of taxes before you get your hands on them. If they are held with an online broker eg. Merrill Lynch then you can do all this in their website.
In our scheme a percentage of the RSUs are sold to cover the tax liability up front and we just cash in the rest whenever we wish so long as the trading window is open and then the money is in the bank within a few days.
all this info is something your employers payroll or HR should really be briefing you on.....
As of now all new issues are. RSU and we have already completed the W8BEN some time ago, although I believe it has to be refreshed every few years. https://www.gov.uk/tax-employee-share-schemes/empl...
I work for a US company and have had share options in early years and RSUs in recent years.
RSUs (restricted stock units) are treated like just extra salary as they are in effect just full shares gifted to you. You may need to fill out a W8BEN tax form for the US tax man otherwise he may take his cut of taxes before you get your hands on them. If they are held with an online broker eg. Merrill Lynch then you can do all this in their website.
In our scheme a percentage of the RSUs are sold to cover the tax liability up front and we just cash in the rest whenever we wish so long as the trading window is open and then the money is in the bank within a few days.
all this info is something your employers payroll or HR should really be briefing you on.....
Currently no tax advice has been given, maybe it will at the time. Personally I am planning on holding the stock for quite a while.
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