I have company share options, when I exercise these shares my company retains 52% and then returns 12% in my next payroll meaning I get taxed at 40% on the shares. Should the shares be taxed a 28% capital gains rather than 40% and is there a tax free amount before I pay capital gains? If I take the shares is it classed as income and would I lose my personal tax free allowance if income went over 100K in a financial year?
System of Law: England-and-Wales
Hi.Can you tell me what type of share option scheme it is please. What are the terms of the scheme?
I receive 1000 shares per year which vest over 4 years, 250 per year, I get the difference in the issue price and price the day I cash them in.I hope this is enough information
Thanks.You pay income tax at your top rate on the gain, the difference between the issue price and the price on the day that you cash them in. If you retained any as opposed to selling them to pay the income tax, your cost for Capital Gains Tax purposes would be the price multiplied by the number of shares on the day that you finally own them.The gain chargeable to income tax would be taken into account for personal allowance purposes.Let me know if you have any further queries.
You say I pay the top rate on the gain which for me is 40%, why not 28% capital gains? Under what circumstances would I pay capital gains rather than 40%. In simple terms I am going to cash £10K of shares this month and take the money, will I pay 40% or 28% capital gains on this?
Yours is an unapproved share option scheme. That means the gain or profit is liable to income tax, not CGT. If you held on to them after you gained control of them, only the increase in value from the date that you gained control of them would be liable to CGT.TonyTax41038.5419016204
Inc Tax, CGT, Corp Tax, IHT, VAT.