100% Income Tax on Sale of Shares? Help!

onlypadog

Hi

I'm a third year student at Newcastle University studying an Engineering course. From August 2007 - September 2008 I took a year out to work in industry, where I was paid a full time salary and paid all Income taxes and national insurance as normal.#

I also opted into the 'shareplus' scheme where a portion of my wage was used to buy shares in the company. When I left the company I was told I needed to sell or transfer the shares, but having nowhere to transfer them to simply decided to sell.

When they were sold, the sale came to a net value of £287.21. This was printed on a statement that basically said that all of this value had been taken off me in tax and I was therefore left with nothing.

Reading the shareplus booklet, I learned this is regarded as an income tax, but surely 100% of the sales is a bit harsh.

Can anyone help with this? Which tax offices etc do I contact to get this looked in to? Any help on this subject would be appreciated.

Thanks, onlypadog

ajbisgr8

doesn't sound right to me. give the tax office a call (there is a tax office locator tool on the hmrc website http://search3.openobjects.com/kbroker/hmrc/locator/locator.jsp?type=1 )

fubar4164

I'm afraid that I don't have enough details to be sure and this is not my area of expertise, but I would speculate that you were buying the shares at a discounted rate when the shares were highly valued and therefore the discount element (i.e. the cost to the company of providing the shares) could have been treated as taxable income once the option to buy was exercised (when you left), and even though you sold them immediately, at Market Value the shares had decreased, so any "profit" you may have made was cancelled out by the tax due on the original purchase.

If so, that's just bad luck, but I may well be wrong. It would be helpful if you could post more details on dates, amounts and whether you were actually buying the shares throughout or simply had the option to buy.

Either way, you will not be paying more than 40% tax on any income, and if you're a student on a sandwich year, probably 22%.

onlypadog

fubar4164 wrote: »

I'm afraid that I don't have enough details to be sure and this is not my area of expertise, but I would speculate that you were buying the shares at a discounted rate when the shares were highly valued and therefore the discount element (i.e. the cost to the company of providing the shares) could have been treated as taxable income once the option to buy was exercised (when you left), and even though you sold them immediately, at Market Value the shares had decreased, so any "profit" you may have made was cancelled out by the tax due on the original purchase.

If so, that's just bad luck, but I may well be wrong. It would be helpful if you could post more details on dates, amounts and whether you were actually buying the shares throughout or simply had the option to buy.

Either way, you will not be paying more than 40% tax on any income, and if you're a student on a sandwich year, probably 22%.

I was basically paying £20 per month for 13 months and that bouth me just over 8 shares in total. When they were sold it was for higher than my original £260 investment so I dont think they decreased in value.

Surely if i needed to pay income tax it would only be on the portion of wage which i used, namely 22% 0f the £260? Or have I got that completely wrong. these things are hard to understand lol

Robert_Sterling_3

I think furbar4164 is correct.

You are telling us how much the shares cost you.
We need to know the actual value the shares had when bought.

I would be interested to know how this works out.