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bigduckontax, Accountant
Category: Tax
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I was given shares in a Restricted Share Scheme in 2011 that

Customer Question

I was given shares in a Restricted Share Scheme in 2011 that vest in 2014. I was made redundant in late 2012 & left with good leaver status & therefore was allowed to keep my shares on a pro rata basis but would still have to wait for the same vesting period to conclude. The shares are about to vest, all perforamce conditions have been met. In the prior years these shares have been taxed with income tax. As these shares vest in 2014 but I have not been an employee since late 2012, does this change the applicable taxation rate? ie Should it be CGT not Income?
Submitted: 4 years ago.
Category: Tax
Expert:  bigduckontax replied 4 years ago.

Hello, I'm Keith and happy to help you with your question. Can you please advise exactly what sort of scheme this was. Was it an EMI scheme? Again was it an approved scheme?


Right, it is 2240 hrs and I am off to bed. If you let me have the data I need I will respond early tomorrow morning.

Customer: replied 4 years ago.
Pretty sure it was an unapproved scheme. Shares were issued for free, which were to vest over three years subject performance conditions. Paid nil cost for the shares.
Expert:  bigduckontax replied 4 years ago.
Sorry for the delay, I has half way through my answer when my PC decided to shut down of its own accord and I lost everything.

In unapproved share schemes you are liable to CGT, Income Tax (IT) and NI on your option. As in unapproved schemes shares are almost invariably sold on vesting there is no gain so no CGT. That is the good news. The bad news is the IT. IT is chargeable on the difference between the market value of the share on the date of the exercise of the option and the option exercise price. IT is payable by the employee through the self assessment tax return for the relevant tax year. This might push you into a higher tax bracket, but at least you have the capital sum from the sale with which to meet the tax.

There you are. There is some help in HMRC Help Sheet 287; it applies to 12/13 tax year, but it does give some guidance. You really should get back to your original employer to find out just what scheme you were actually on when they granted the option as there are fundamental tax differences in the treatment of schemes.