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bigduckontax, Accountant
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I need help in calculating the Income Tax & CG Tax payable

Resolved Question:

Hi, I need help in calculating the Income Tax & CG Tax payable on some share options that are vesting shortly.
All share options will be sold at £44.00 per share.
1. Approved Company Share Option Plan: 1252 shares @ £23.95 per share
2. Unapproved share option plan: 748 shares @ £23.95 per share
3. Share Appreciation Rights - Stock Settled plan: 2500 shares @£33.30 per share
Thanks!
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Forgot to add: I'm a higher rate tax payer.
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The normal procedure is for share options of this type is that they are disposed of immediately on vesting. Thus for Capital Gains Tax (CGT) purposes there is no liability as there is no gain. Furthermore, Gov UK advise: 'You can transfer up to £15,240 of employee shares into a stocks and shares Individual Savings Account (ISA) if you have shares in a:Save As You Earn (SAYE) schemeShare Incentive Plan (SIP)Your ISA provider must agree to the transfer.You won’t have to pay Capital Gains Tax on any gains you make on your shares if you move them to an ISA.You must transfer your shares to your ISA within 90 days of when you took out your SIP or SAYE shares.' This enables you to avoid some CGT in the future if you so wish. I do hope my reply has been of assistance.
Customer: replied 1 year ago.
Hi, many thanks for your response. In this case I really need to extract the cash to pay off a big chunk of my mortgage (with an interest rate quite a bit higher than what an ISA can provide at the moment). Does that have an impact?If I read your response correctly, am I right in saying CGT gets calculated on the difference between the disposal price and the vesting price, as opposed to the difference between the disposal price and the purchase price?Also, is there any Income Tax liability if I were to take the cash?Many thanks.
Expert:  bigduckontax replied 1 year ago.
Normally yes, but as I told you it is a standard practice to sell immediately on vesting hence there is no capital gain and thus no CGT. If you delay then indeed CGT will be liable on the gain between the vesting price and the net disposal price, but you do have an Annual Exempt Amount of 11.1K to offset this. Taking the cash does not attract Income Tax liability. Please be so kind as to rate me brfore you leave the Just Answer site.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3099
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 1 year ago.
Fantastic, many thanks.
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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