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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have received shares from my previous employer as

Customer Question


I have received shares from my previous employer as benefit (I did not pay )
they have subsequently repurchased them (after I had left the company)
although the purchase price was lower than the value of the shares when I was given them so it seems like I sold at a loss, I still received 2000pounds untaxed.
I am struggling to understand how to report this in my tax return
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
.

Can you give me some information about the circumstances of the initial gift of shares by your employer please. How long ago were you given the shares? Ho much were they worth when they were given to you?
Customer: replied 2 years ago.

,

the shares were give to me as a retention programme

the were time vesting shares so every year part of the amount of shares you were give would vest and when I left the company the shares that had vested where then repurchased from me (they could be at sole discretion of the company)

17/5/2013 - origina issuance fair market value on issuance 17.80

08/01/2014 repurchase fair market value on repurchase 17.44

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.

I'm back.

Free shares can be given with no income tax liability through one of the Share Incentive Plans (SIP) which you can read about here and here. There is information on other employee share schemes here.

If the shares were in a SIP, you may have to pay tax and NIC on the value of value of the shares withdrawn and sold by entering it in box 1 of the share schemes section of page Ai2 of the additional information pages SA101 which you can find here. That is, unless you left the employer as a "good leaver" which is defined in paragraph G22 on page 73 here. Normally, any income tax and NIC charge would be dealt with by the employer through the PAYE scheme.

If you were a "good leaver", you won't have to pay income tax and NIC and you won't pay CGT as you made a "loss" and the annual CGT exemption /14 was £10,900. You would also not need to report the disposal as the proceeds of the sale were less than £43,600 (4 times the annual CGT exemption).

It's important that you contact your former employer to find out exactly what type of employee share scheme you participated in so as to avoid paying tax needlessly and to find out whether you paid any income tax when you sold the shares back to the company. Normally, the employer would operate PAYE on an early SIP withdrawal.

I hope this helps but let me know if you have any further questions.

Customer: replied 2 years ago.
Thank you.
The plan was managed by the headquarters in the US (Delaware law).
Is a SIP also a US plan?
In the contract does not mention anything about that
Expert:  TonyTax replied 2 years ago.

It won't be a SIP as its a US plan. It will almost certainly not be an HMRC approved plan and that will make the cash you received taxable. Most US employee share plans are not approved by HMRC in the UK and so don't benefit from the tax rules that UK schemes do.

I'd be inclined to declare the sum you received in the SA101 box I mentioned in my previous post. Because of the nature of the US tax advantaged rules around Delaware registered companies, income from them doesn't qualify tax treaty relief so even if you paid tax in Delaware, you won't be able to offset it against your UK tax liability..

Customer: replied 2 years ago.

Should I declare them as UK income? I have provisionally declared them as foreign income
Expert:  TonyTax replied 2 years ago.
You can use the foreign pages SA106 here to disclose the income. It makes sense to be consistent with what you have done previously.
Customer: replied 2 years ago.

It seems like you did not receive my last message
I cannot relate to the pages you send me as the online return which I have to fill in seems to have different page / sections
I have reported this in the foreign page as other non declared income but when I get to the calculation page I get that I do not have to make any payment - I am really confused
Expert:  TonyTax replied 2 years ago.

The data entry screens in the online return are not the same as the tax return pages but you should be able to view your return as you fill in the parts relevant to you.

Obviously, your tax liability will be affected by all the entries you make. If you like, you can upload the tax calculation to me and I'll look at it. Alternatively, set out the figures that you have entered your sources of income and I'll look at those.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
,
Thank you.
I am travelling in South America so sometimes I do not have Internet connection.
I have taken screen shots of what I did on the tax return but I don't know how to upload them to you?
Expert:  TonyTax replied 2 years ago.

You should see a paper clip in the formatting bar of the text box you are typing into. You can upload scans and files using that. You may find it easier to list the income sources and figures.

Customer: replied 2 years ago.

I could not find a way to upload but I think I know what the problem is.
I was trying to report only this item in the return since I have only employee salary on top of that - but it does not work this way
So I will need to fill the return properly when I get home - I understand I will pay a fine of 100 pounds delay..
Thank you
Daniela
Expert:  TonyTax replied 2 years ago.
Thanks and good luck.

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