Shares given by Employer - Tax
Discussion
Ive been getting shares as my bonus for the last 25 years, all the schemes ive been part of have just treated the shares as PAYE income.
In US listed companies this means I get issued RSUs (restricted stock units) and elect to have 45% sold when I vest to cover the tax liability. If you are not a 45% tax payer there is a mechanism to claim back overpaid tax when you do self assessment.
I also have stock options, but the scheme in which these are in also treat as PAYE income, so when I sell them another 45% tax is kept back.
The payroll or finance department of the company you work for should have some documents which explain all this, and particularly what type of share scheme they have.
In US listed companies this means I get issued RSUs (restricted stock units) and elect to have 45% sold when I vest to cover the tax liability. If you are not a 45% tax payer there is a mechanism to claim back overpaid tax when you do self assessment.
I also have stock options, but the scheme in which these are in also treat as PAYE income, so when I sell them another 45% tax is kept back.
The payroll or finance department of the company you work for should have some documents which explain all this, and particularly what type of share scheme they have.
As said already it may depend on the type of scheme involved which the Co Sec or HR will no doubt give you the details of.
I had both given ,part paid for and option share schemes which all attracted different tax regimes although iirc the majority was done through PAYE.
Don't forget it may also be possible to then transfer some to your wife if applicable at which point it is also possible to do something about any CGT payable although less so these days with the tiny allowances available.
I had both given ,part paid for and option share schemes which all attracted different tax regimes although iirc the majority was done through PAYE.
Don't forget it may also be possible to then transfer some to your wife if applicable at which point it is also possible to do something about any CGT payable although less so these days with the tiny allowances available.
bogie said:
Ive been getting shares as my bonus for the last 25 years, all the schemes ive been part of have just treated the shares as PAYE income.
In US listed companies this means I get issued RSUs (restricted stock units) and elect to have 45% sold when I vest to cover the tax liability. If you are not a 45% tax payer there is a mechanism to claim back overpaid tax when you do self assessment.
I also have stock options, but the scheme in which these are in also treat as PAYE income, so when I sell them another 45% tax is kept back.
The payroll or finance department of the company you work for should have some documents which explain all this, and particularly what type of share scheme they have.
Mine was always 48% or 49% In US listed companies this means I get issued RSUs (restricted stock units) and elect to have 45% sold when I vest to cover the tax liability. If you are not a 45% tax payer there is a mechanism to claim back overpaid tax when you do self assessment.
I also have stock options, but the scheme in which these are in also treat as PAYE income, so when I sell them another 45% tax is kept back.
The payroll or finance department of the company you work for should have some documents which explain all this, and particularly what type of share scheme they have.
The last company removed the option to pay the tax on ESPP which was a shame, we were forced to sell to cover.
In the old days we had to pay the tax next month if we sold or not, which could be fun
supersport said:
That entirely depends on the scheme under which you acquired them.
This. You should have been given, or be able to ask your employer, for details of the scheme that probably includes an indication of likely tax treatment. Nobody else can give you a sensible answer without seeing it, so really is one to discuss with your firm and/or accountant.We also had to pay employers NI, (ESPP and options) although some of this was rebated. The withholding rate was 56%.
In the first year after IPO they never withheld, but paid the tax through PAYE. The first six month cliff edge was fun. The company paid the tax and we paid them back each month until it was covered. Zero pay for three months. Made for very strange pay slips
In the first year after IPO they never withheld, but paid the tax through PAYE. The first six month cliff edge was fun. The company paid the tax and we paid them back each month until it was covered. Zero pay for three months. Made for very strange pay slips
edition said:
Thanks - just found the letter I got at the time.
Grrr I think I give 40% away :-(
Thanks all
I had the same earlier in the year in a scheme managed by a US company.Grrr I think I give 40% away :-(
Thanks all
As said above the scheme holder sold a sufficient number of them to cover the tax at 45%.
On my Pay Slip the total share value on the day of vesting was shown as income split across two line items One being the 45% tax liability and the other being the remainder.
my PAYE value in the deductions was then the combined "normal income tax" deduction plus the tax liability number and then there was another line which matched the remainder of the share value as a deduction too.
So your Gross pay that month will be epic but so will your deductions!
One thing I would say is and depends on value of shares you are going to get, but be wary that if it pushes you over the £100k tax threshold then you could end up owing some of your personal allowance that you might have been getting prior to the shares vesting.
Gassing Station | Finance | Top of Page | What's New | My Stuff