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bigduckontax, Accountant
Category: Tax
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I have 225000 EMI/Unapproved shares in my company that i have

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I have 225000 EMI/Unapproved shares in my company that i have yet to exercise. The share option is at 40p per share and the current market price is £1.40. I am a higher rate tax payer on a salary of approx £67000. Can you tell me how much CGT , income tax and Nic's I would end up paying were I to sell the shares now?
Hello, I'm Keith and happy to help you with your question.
Taylor Wessing advise as follows:
'On exercise of the option, income tax will be charged on the difference between the market value of the shares at the date of exercise of the option and the option exercise price.'
You thus have an income tax liability on GBP 225K, ie a quid a share. You will loose your Personal Allowance, 150K-67K=83K @ 40% = 33.2K tax plus 142K @ 45% = 63.9K, total Income Tax bill of the order of 97.1K. You are over the maximum so there are no more NI payments to be met.
There will be no CGT, Taylor Wessing again:
'If an unapproved option is exercised and the shares sold on the same day, there will normally be no capital gains tax to pay'
Please bear in mind Benjamin Franklin's dictum that in life there are but two certainties, death and taxes. It looks like a pretty massive bill, but you do have a lot of shares in EMI.
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