LTIP on tax return?

candykisses

Hi

My friend has the following payslip from an employer

Total Payment LTIP (taxable) 1542.45

Total Deductions
Tax Paid 308.40
NI Contracted in 87.72
LTIP's Recovery 1146.24

Cumulatives
Total Gross 1542.45
Taxable Gross 1542.45
Tax Paid 308.40
Employees NI 87.72
Employers NI 183.35

Net payment 9 pence!

Do any of the above figures need to be entered on self assessment tax return, and if so where?

thank you

taxing

Hi

You haven't said if 'current' or 'past' employer.

The LTIP has been taxed at basic rate (20%) with no tax allowance so provided the friend is not earning enough to pay tax at 40% (or at 50% if he/she is lucky) - and also provided that the addition of this to all other income won't tip him/her in to 40% tax bracket by the end of the tax year....then probably not.

Significance if is from current employer is that the payment would be accumulated with month to month pay - they may have just issued a separate payslip to keep things transparent - the use of BR would be correct as tax allowances will be against regular pay.

A previous employer would have to apply a BR code...

http://www.hmrc.gov.uk/manuals/eimanual/eim40016.htm

Regards

John_Pierpoint

What Does Long-Term Incentive Plan - LTIP Mean?
A reward system designed to improve employees' long-term performance by providing rewards that may not be tied to the company's share price. In a typical LTIP, the employee (usually an executive) must fulfill various conditions and/or requirements that prove that he or she has contributed to increasing shareholder value. The incentives for doing this are usually conditional company shares, which are distributed in two parts. The first part represents an immediate distribution of half of the shares, while the remaining half of the shares will only be presented to the executive if he or she stays with the company for a predefined number of years.

Some businesses have replaced pure options-based incentives in favor of LTIPs. One criticism about how some firms have been using LTIPs is that executives still receive the second half of the reward even if their performance has not been exceptional in the subsequent years. This is because in order to receive the second portion of the shares, the executive must only succeed in not being terminated in the designated time span.

In some forms of LTIP, recipients receive special capped options in addition to stock.