Tax on share options
Discussion
All, anyone on here a tax advisor? I have, as part of my redundancy package, received shares in my former company, as if I were still there.
I have not earned anything this year, as I am taking a career break. The share grant relates to my 2016 year of earning (as in they were part of my bonus that year, deferred as always to a later year as a means of retention - I negotiated to have them despite leaving as part of my redundancy).
Trouble is, the company are stating that when exercised, they will be taxed at 45%. But they are the first thing I have earned this tax year, and so I think that they should be taxed as if they were my first earnings. I obviously have no basis for this - so I need a tax advisor. Anyone on here know one, or is one?
I do not want to exercise the options until I have sorted this out, and I'm on a time limit as far as that is concerned...
Thanks,
HF.
I have not earned anything this year, as I am taking a career break. The share grant relates to my 2016 year of earning (as in they were part of my bonus that year, deferred as always to a later year as a means of retention - I negotiated to have them despite leaving as part of my redundancy).
Trouble is, the company are stating that when exercised, they will be taxed at 45%. But they are the first thing I have earned this tax year, and so I think that they should be taxed as if they were my first earnings. I obviously have no basis for this - so I need a tax advisor. Anyone on here know one, or is one?
I do not want to exercise the options until I have sorted this out, and I'm on a time limit as far as that is concerned...
Thanks,
HF.
Harry Flashman said:
And that has worked? How much info do you have to give, and how did you prove the tax calculation? Help appreciated!
Each December the ex employer make the payment and send me a regular payslip showing gross & net pay. I just put both figures into SA. It calculates the correct tax and they pay the difference. There are two places you can put it into SA. One is just as a regular employer, the other is as residual post-employment payments. I've tried both and it doesn't seem to make any difference to the amount it calculates I am due.If you don't want to go down the SA route you can just ring HMRC and they can arrange paying back the overpayment outside the SA cycle. I have never tried this but been told its pretty painless.
I should add.
The equity party of my bonuses were paid in Restricted Share Units rather than options. So say the equity party of your bonus is 50k. You actually receive x number of shares which at current valuation are worth 50k.
These then vest in 3 tranches. At time of vesting you get a third of the shares using share price at vesting date. You receive cash at vesting not shares. This is then paid through PAYE and appear on a regular payslip. If you are still employed it will also be on your P60.
After the employment ends (assuming you are a 'good' leaver), a one-off payslip is issued with every subsequent vesting amount.
I'm not sure if this is how your process works - it may be different if you have received stock options.
The equity party of my bonuses were paid in Restricted Share Units rather than options. So say the equity party of your bonus is 50k. You actually receive x number of shares which at current valuation are worth 50k.
These then vest in 3 tranches. At time of vesting you get a third of the shares using share price at vesting date. You receive cash at vesting not shares. This is then paid through PAYE and appear on a regular payslip. If you are still employed it will also be on your P60.
After the employment ends (assuming you are a 'good' leaver), a one-off payslip is issued with every subsequent vesting amount.
I'm not sure if this is how your process works - it may be different if you have received stock options.
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