Share option ending early

cazarol

The company I work for was taken over and from how I understand things my share options are terminated early. On a certain date I have opted for the shares I have accumulated to be sold at a set rate and this will result in my making a profit from the original money I have had deducted from my wages. I have been reimbursed the total amount so profit and money deducted to my current account. Wonder if anyone can advise on a couple of questions please.
Do I have to pay tax on any of this or all of it?
If so who do I let know? etc etc
Thanks in anticipation

LOST

any gain would be suject to Capital Gains Tax and would be paid on your Tax returns at the end of the year - but you have an annual allowance of £8,800 per year - so any gains/profits above £8,800 will be taxed only

cazarol

Thanks for that. Thats good news as I havent received even the full amount never mind gained it so excellent!
Thank you for the quick reply

cash99

LOST wrote:

any gain would be suject to Capital Gains Tax and would be paid on your Tax returns at the end of the year - but you have an annual allowance of £8,800 per year - so any gains/profits above £8,800 will be taxed only

It very much depends on the type of option involved, as to whether or not any gain is taxed as income or capital.

Your employer should be able to answer this question very easily, as they will have checked whether or not they need to deduct PAYE. As they have not it is likely but not conclusive that the gain is subject to capital gains tax rather that income tax.

Ask your employer.

Petmidget

This sounds much like an ESOP (Employee Share Ownership Scheme) which has failed due to a buyout occuring before the 3 or 5 year period of scheme has finished.

As the deductions (i assume monthly) from your salary over period are out of your after tax income, then money returned is purely a refund of a deposit and subject neither to IT nor CGT. Any interest earned and added to the returned however will be subject to IT but was likely deducted at source anyway.

Boswell_2

If it is a share option (Save As Yo Earn) and you exercised it within three years of the grant date then I believe the profit is subject to income tax at your marginal rate. You sharesave administrator will know for sure - as will the building society or bank that held your deductions

sconieroany

Hi, I work for the same company (or used to) LOL, my understanding is say you invested £5000 to buy the shares in the scheme (saye) ad that to the £8800 cgt allowance = £13800 any profit after that is subject to cgt, as it is a saye scheme income tax is payable on the profit form your original option price say £4.35 up to the takeover price £9.35, so tax is payable on the £5 profit, 20p in the £ if you are standard rate.

You have to work that out for each of your options and then send of a self assesment cheque to the tax man before Jan 2008, that's my take on it anyway after trying to digest the phone book document they sent, a lot of people will no doubt spend the cash and pay the taxman nothing as they have never dealt with self assesment before, I don't know who or when the taxman checks these things however ? anyone shed any light on how the taxman knows you owe him share income tax ?

Cheers

cash99

sconieroany wrote:

I don't know who or when the taxman checks these things however ? anyone shed any light on how the taxman knows you owe him share income tax ?Cheers

Employers file annual returns for all share option schemes. So the taxman will know.