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bigduckontax
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 3816
Experience:  FCCA FCMA CGMA ACIS
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I have been awarded options by the us parent of my company.

Customer Question

I have been awarded options by the us parent of my company. they vest in 4yrs where will I be liable for tax and I guess thi sis income tax
Submitted: 1 year ago.
Category: UK Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
As this is an US scheme it will not be one approved by HMRC. The effect of vesting of such schemes may result in an Income Tax liability. Taylor Wessing give the following advice:
'On exercise of the option, income tax will be charged on the difference between the market value of the shares at the date of exercise of the option and the option exercise price.'
So there you are, no liability for four years and then only the difference. This will be levied at your marginal rate of tax.
I do hope that my reply has been of assistance.
Customer: replied 1 year ago.
i have
£300k vesting 2018
and
$250k vesting 2019lets say that they have increased 20% so£360k in 2018 tax would be 45% of £60k
$300k in 2019 tax would be 45% of $50kand no us tax to pay only uk
Customer: replied 1 year ago.
who are taylor wessing .. your company
Expert:  bigduckontax replied 1 year ago.
The US tax position is identical to the UK's see Fairmark.com; Tax Guide for Investors. If the IRS levy tax then under the Double Taxation Treaty between the UK and the USA, and indeed some individual states also, any tax deducted in the States would be allowed as a tax credit against any UK liability on the same option exercise. Thus you are not taxed in both jurisdictions. The Treaty does not, however, protect you from differences in rates of taxation.
Without fuller knowledge of the scheme I cannot tell whether US taxation would or would not apply.
Taylor Wessing are a world wide legal and financial advice practice. You can read all about their services here:
http://www.taylorwessing.com/home.html