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bigduckontax, Accountant
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I worked for a Pre-IPO company recently. My shares vested

Resolved Question:

Hi,
I worked for a Pre-IPO company recently. My shares vested and i had the opprtunity to purchase them at the strike price offered when i joined which i have now done.
My question is two fold. namely;
1.) what paperwork should i have received after purchasing these? all i have is the fulled executed exhibit of the stock sub-plan? how would i use this to transfer my shares to a broker account once company IPO's
2.) What are the tax implications of this purchase? do i declare this in my self assesment and if so as what? all i have a tthe moment is the notice in the exhibit which states.... "Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice."
Thanks in advance for any help you can offer
Kind Regards,
Clayton
Submitted: 1 year ago.
Category: Tax
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.

1. You should receive a share certificate from the company showing the shares you have bought.

2. 'When an option is exercised, income tax arises on the difference between the shares' market value on the date of exercise and their exercise price [source: Practical Law].

The employer is liable to account for income tax if the shares meet the necessary criteria. If the employer is liable, it pays income tax and employee NICs under PAYE, and employer NICs. If it is not liable, employees pay income tax under the self-assessment system, with no employee or employer NICs being payable.'

Finally when the shares are sold at some future, indeterminate date then Capital Gains Tax (CGT) will apply to any gain derived from the selling price and the exercise price. You have an Annual Exempt Amount (AEA), currently 11.1K, to offset any gain. In such schemes it is normal for the shares to be sold on the exercise date so there is no capital gain to tax.

I do hope that you have found my reply of assistance.

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.

Thank you for your support.