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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have exercised a company share option scheme in tax tear

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I have exercised a company share option scheme in tax tear 2013-14, I have bought and sold them as they became due through the companies advised trader. I have not paid tax on the benefit and I am unclear on my tax postion on attempting to complete my tax return. I am a higher tax rate payer - thank you!


Can you tell me about the oprion scheme, terms and conditions etc, please. Was it an appoved one or an unapproved one? Did you pay tax on the profit you made through the payroll? Give me the figures if you have them.

Customer: replied 3 years ago.
Scheme is described as executive share option scheme ESOS - company States it is "eligible tax treatment"
No tax has been paid through the pay roll - I had direct contact with a company called Equiniti who bought and sold the shares on my behalf and paid me the gain. On my summary statement it states "taxable amount is £0.0" but seems in conflict from HMRC guidance?

Leave this with me while I draft my answer.
Customer: replied 3 years ago.
Just to be clear - the taxable amount is on the option price not the the benefit.
Figures as below
Sale proceed £ 62,195.99
Option cost £21,761.72
No tax, no employees NI, no employers Ni,
Paid benefit amount £40,434.27 (some charges by Equiniti £218.51, £15.9, £1.0
Many thanks
I had just drafted my answer and was about to post it when you gave me some figures so I need to adjust it.

I'm back.

If the scheme is eligible tax treatment, that means that the difference between the value of the shares on the day that you exercised them and the price you paid to exercise them is not subject to income tax and NIC. It is subject to CGT.

The gain you made by buying (exercising) and selling the shares will be subject to CGT if the total of all the gains you made in the 2013/14 tax year exceeded £10,900 and you had no capital losses brought forward to use against gains made in 2013/14.

If the gains /14 were no more than £10,900 and the total of the disposal proceeds your capital transactions, eg share dealing, property sale etc, was no more than £43,600 (4 times the annual CGT exemption) then you don't need to report the disposal in your 2014 tax return.

You made a capital gain of £40,198 (£62,196 - £21,762 - £219 - £16 - 1). You need to complete the capital gains pages SA108 which you can find here.

Take a look here information on capital gains and capital gains tax.

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

Customer: replied 3 years ago.
Many thanks - I had no other capital gains other than this exercise - based on this advice it would appear I have a taxable gain that I can have to declare on SA108. I did try to complete on my self assessment before this adviice and got an amount over £26k - I will use the SA108 form and see what happens! Thanks help

Your CGT should be around £8,203.44 (£40,198 - £10,900 x 28%) assuming your earnings alone were £41,450 or more.

If the options were EMI options, you may be entitled to entrepreneurs' relief which would limit the CGT charge to 10%.

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