Not ordinarily resident pickle

lemon-p

Between 2000 - 2005 I was employed by a US company, I was resident in China/HongKong for tax purposes and NOR in the UK. I acquired shares in my employers company in 2003 after exercising a Cashless Hold on a stock option granted in 2001. The option price was $4.5, I exercised with the price at $18 and acquired 2,020 shares. Subsequent to my return to the UK there was a 2-1 share split. I sold 4,040 shares yesterday at $24 per share. I am totally unclear as to what UK tax I am now liable.

Any pointers would be gratefully received. Thanks

tyllwyd

At a guess, possibly capital gains tax? If nobody can give you advice here, I think you need to find an accountant who can help.

http://www.hmrc.gov.uk/cgt/shares/basics.htm

laticsforlife

Yes I think that as the gain was made when you were OR then CGT is due, and the previous post is right, you need an accountant to do the math.

Londonboy_3

lemon-p wrote: »

Between 2000 - 2005 I was employed by a US company, I was resident in China/HongKong for tax purposes and NOR in the UK. I acquired shares in my employers company in 2003 after exercising a Cashless Hold on a stock option granted in 2001. The option price was $4.5, I exercised with the price at $18 and acquired 2,020 shares. Subsequent to my return to the UK there was a 2-1 share split. I sold 4,040 shares yesterday at $24 per share. I am totally unclear as to what UK tax I am now liable.

Any pointers would be gratefully received. Thanks

OK I think I can help.

If you were resident in China for 5 years then it is likely you were non resident as well as being not ordinarily resident in the UK. If your visits back to the UK were more than 91 days per annum however you will hjave remained resident in the UK. I am going to assume you did not spend this much time back in the UK so for income tax purposes you became non resident the day after you left the UK.

You were granted the option whilst non resident in the UK and the split also happened whilst non resident - as such, no UK income tax due on exercise even though the plan is (I assume) unapproved.

For CGT purposes anything you buy and sell as a non resident (once you get to April 6 following your departure) is not liable for CGT. However, you are now resident again in the UK and as such the gain is taxable in the UK. The difficult bit for you will be getting the base cost correct when the CGT is calculated. Where income tax is chargeable on the exercise of an option, you can then uplift your base cost to the MV on date of exercise - this means that, for example, if you exercise an option and sell the shares on the same day, there is no CGT to pay. For you, it will be trickier and will depend on whether you:

1. Paid any Chinese income tax on exercise on the first lot and
2. If you did whether HMRC would allow you to uplift the base cost of the first lot to $18 per share.

If the answer to 1 or 2 is no, you will owe CGT on the proceeds less base cost, less your CGT exemption for the year (assuming no other gains) * 18%. Payable 31 Jan 2011 if you sold after April 5 this year.

As mentioned - you probably need to speak to check your records to see whether any Chinese tax was payable on exercise and whether you can take an uplift to MV on exercise for your base cost as a result.

lemon-p

Thanks Londonboy, this is about the same place I'd got to with my own machinations, it's just good to have a bit of moral support as I stumble round in the dark. You're a good'n.