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taxadvisor.uk, Chartered Certified Accountant
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In 2010 I was awarded Free Shares from my then employer and

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In 2010 I was awarded Free Shares from my then employer and it is an unapproved employee share scheme.

I sold them in March 2013 when I was no longer an employee of the company.

Do I have to pay income tax and national insurance or just capital gains tax?

Hello and welcome to the site. Thank you for your question.

With an unapproved scheme you will pay

- Income Tax and National Insurance contributions when you use the option to buy shares for less than their value

- Capital Gains Tax when you sell the shares, based on the increase in value since the shares were issued to you.

Confirmation of this can be found under Tax rules for other employee share schemes here

http://www.hmrc.gov.uk/working/bens-shares-tips/shareschemes.htm#3

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 4 years ago.

OK, thanks for your reply.


 


So to clarify, I acquired the shares on 04/03/2013 and paid nothing for them.


 


I pay national insurance and income tax of the amount I received when selling them.


 


Effectively receiving free shares is like an option to buy the shares for nothing.

Matthew, thank you for your reply.

You will declare the gain in Capital gains section and you don't pay income tax and/or National insurance on sale of them.

You must fill in the Capital gains summary pages and attach your computations if in the tax year:
- you disposed of chargeable assets which were worth more than £42,400, or
- your chargeable gains (before the deduction of any losses) are more than
£10,600

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 4 years ago.

So I don't pay national insurance and income tax?


 


I just pay capital gains tax?


 


I am confused now.

Matthew, thank you fo ryour reply.

You just pay Capital gains Tax.

I hope this is clear.
Customer: replied 4 years ago.

Why don't I pay national insurance and income tax?

Matthew, thank you for your reply.

You stated in your question that "In 2010 I was awarded Free Shares from my then employer and it is an unapproved employee share scheme.I sold them in March 2013 when I was no longer an employee of the company."

With an unapproved scheme you will pay Capital Gains Tax when you sell the shares, based on the increase in value since the shares were issued to you. if they were issued to you for nothing then you gain is the sale proceeds. This is set by HMRC and I forwarded the link to you.

I hope this is helpful.
taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Thanks for your help today.

Matthew, it was a pleasure helping you.

Good luck.