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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a question regarding the treatment on my 2015/16 of

Resolved Question:

Good evening,
I have a question regarding the treatment on my 2015/16 of income received from the sale of shares in a company employment scheme. The situation is as follows:
I received a gross amount of £27,329 in October 2015. This was the portion of the total distribution attributable to the time I spent in the UK between the grant and vesting date of the shares. The company deducted tax at source (£11,143) and I received the net proceeds of £16,186 via payroll. I ceased working for this employer in November 2014 so none of this was included in my P45.
My question is whether I need to include this on my 2015 2016 self assessment since tax was deducted at source (the effective rate of tax on this was 40.77%). I am a higher rate tax payer and excluding this £27,329, my gross income from all sources (employment, rental income and dividend income) was about £98,000.
Please advise on the correct treatment of the proceeds from this share scheme on my tax return.
Thanks!
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

Let me take a look at this and I'll get back to you with an answer in a bit.

Customer: replied 1 year ago.
Ok thanks
Expert:  TonyTax replied 1 year ago.

The payment needs to be disclosed as it is taxable income.

Take a look at the share schemes section on page Ai2 here and the notes on the additional information pages here.

In the past, your payment would have gone into box 1 but as you will read in the notes, you should only complete box 1 if the payment has not been fully taxed. Yours has. Box 2 has been withdrawn from use. I queried this with HMRC a while back and it was suggested I use box 3 for the pre-tax payment and put the tax deducted figure in box 6. I submitted the client's tax return with a note in the white space explaining the source and so far, it's not been queried. I was told by HMRC that box 2 was withdrawn because employers were not dealing with the share payments correctly.

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

Customer: replied 1 year ago.
Tony - thanks. This makes sense.
To put it the employment section takes my total income to about £125,000 which fully erodes my personal allowance. Hence, my preference would be not to have to report it (since it's been taxed at source).
Putting it under the employment section increase my tax liability by about £4,000 (due to the loss of the personal allowance).
However, if this is how it needs to be handled, then that's how I will report it. Please confirm I should absolutely put it in the employment section.
Thanks for your speedy response. Best, Peter
Expert:  TonyTax replied 1 year ago.

I'm afraid that the income from the shares will be part of your overall income for the purposes of determining your eligibility for the personal allowance or not. The tax calculation will show that. Take a look at the notes on "adjusted net income " here. The additional information pages mop up income and outgoings that cannot go elsewhere in the tax return or other supporting pages.

You cannot not report it. The SA101 pages are where you report the share gain.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
OK understood. Thanks very much for the advice. Very happy with the quality of advice given and will rate you highly. Have a good evening further, Peter
Expert:  TonyTax replied 1 year ago.

Thanks.