Tax on company shares after redundancy

big_mortgage

Hi

I was made redundant March 08 and was a member of the 'Employee Share purchase program' (ESPP), being able to buy shares in the Canadian parent company I worked for in CDN$. I bought shares out of my post tax income (so not tax and NI free) and the company matched half up to a limit. (All) My shares 'vested' upon redundancy.

Whan I was made redundant I had to pay tax on the employers contribution.

Now having just become a member of the company I now work for Share scheme (SIP), I see that should I be made redundant, share would become mine with no tax liability.

So I have just realised, is it right that I paid tax on the first lot?

The shares were managed online and all the paperwork I have is my redundancy letter stating I must pay this and my last payslip showing that the tax was deducted.

thanks in advance if anyone can answer this.

John_Pierpoint

Company share schemes can be a nightmare.
Here is a link that may help:
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10022224
It sounds to me as if your "old" company may not be "approved" and anyway the rules of their scheme said "any employee leaving our employment must be given their shares on leaving , so any remuneration or benefits in kind given to you are then taxable.
(The idea of these schemes is often to tie you to the company and make you think twice about leaving)

In the case of the "new" company, perhaps the company is absorbing the tax payable?

Though not exactly the same as your situation, I was a big investor in the SAYE scheme of a Footsie company. Unfortunately the division I worked in was sold off to another company and under the terms of the scheme we were no longer able to exercise our options tax free at maturity; meanwhile British Gas was restructuring and creating a situation identical to mine BUT British Gas paid the tax due if their (former) employees exercised their options.

big_mortgage

Thank you John.

I guess then, the scheme was not approved. Perhaps, since I did not purchase shares tax free, the indication is that I would then have had to pay the tax on the ones the employers bought.

and off topic... I thought all SIP schemes were free of tax, should you become redundant, perhaps the employer does pay in that case.