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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4348
Experience:  FCCA FCMA CGMA ACIS
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A quick question. If you receive UK company shares

Customer Question

Hello,
A quick question.
If you receive UK company shares as part of a long term incentive plan (LTIP) on the date they become yours are you taxed at the rate and on the day they become yours, even if you don't sell the shares on that day?
Thank you for your response!
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Here is the general advice from Bird and Bird: 'No income tax arises until the option is exercised, pay as you earn ("PAYE") and National Insurance contributions ("NIC") will arise at that point if the shares are readily convertible assets. Participants will typically sell all their shares on the date of exercise and part of the sale proceeds will be paid to the employer to enable it to operate withholding. ' If the shares are sold on the day vesting, as is normal, no Capital Gains Tax (CGT) will be incurred as there has been no gain. If you sell later there may be a CGT liability if there is a gain, remember you have a 11.1K Annual Exempt Amount to offset this. Not selling on the day or exercise of the option could land you with two tranches of tax under both the Income Tax/NI and the CGT regimes. I do hope that my reply has been of assistance.