Capital Gains Tax

Odessite

Previously posted Savings and Investments - advised to post here instead.


Hello, we are retired. Many years ao my then employers granted me some share options.

I have now exercised these on a cashless basis as we had insufficient funds to pay the exercise price per share. As I understand it, all options were exercised and issued shares are sold in the market. Part of the proceeds were used to cover the exercise price of the options for shares.

Since the exercising of options for shares is counted as income for taxation purposes, the proceeds were reduced by 20% income tax and also by NIC.

We see from the above that there are two amounts here, the GROSS and the NET. Which of these two amounts should I report on our tax return? I ask because the GROSS amount is in excess of this year's CGT limit but the net is below.

Finally, is it correct that my ex-employers should retain NIC?

Much obliged for any help or advice.

chrismac1

When declaring CGT, report the gross value as disposal proceeds. But then all costs involved - costs of orginal purchase, fees involved, costs deducted on the sale - are an allowable cost against this. So your taxable gain will then come down below 10,100 and no tax to pay.

KPR11

Odessite wrote: »

Previously posted Savings and Investments - advised to post here instead.


Hello, we are retired. Many years ao my then employers granted me some share options.

I have now exercised these on a cashless basis as we had insufficient funds to pay the exercise price per share. As I understand it, all options were exercised and issued shares are sold in the market. Part of the proceeds were used to cover the exercise price of the options for shares.

Since the exercising of options for shares is counted as income for taxation purposes, the proceeds were reduced by 20% income tax and also by NIC.

We see from the above that there are two amounts here, the GROSS and the NET. Which of these two amounts should I report on our tax return? I ask because the GROSS amount is in excess of this year's CGT limit but the net is below.

Finally, is it correct that my ex-employers should retain NIC?

Much obliged for any help or advice.

The answer will depend on the following:

1. Were the options granted under an approved scheme?
2. Were the shares readily convertible assets i.e. listed shares or with arrangements for sale when you were granted the options?
3. Did you agree to pay the employers NIC?

DRS1

I had a go at answering your other post but I have something to add to that about NIC. It may be worth asking if you are too old to be paying NIC. As I recall if you are over a certain age (65 for men?) you don't have to pay it. I am not sure if that applies to employer NICs as well.

Odessite

DRS1 wrote: »

I had a go at answering your other post but I have something to add to that about NIC. It may be worth asking if you are too old to be paying NIC. As I recall if you are over a certain age (65 for men?) you don't have to pay it. I am not sure if that applies to employer NICs as well.

I'm actually 64. Retired a couple of years earlier due to some health problems and a daily commute of over 4 hours. We have been living on our small savings and my private pension (smaller than the state pension!)

Just discovered the NIC deducted is valid as I am under 65. Oh well, had I waited a couple of months, I could have saved £400!

Thanks to all for advice and help.