Shares and working tax credits confusion

Toffee10

Hi
I've googled for this and can't find anything and the tax credits helpline cant give me an answer either!

What I need to know is that- I held shares in my works which I cashed in and sold this yr. do I have to declare the profit I made from the shared on my tax credit application?
Thanks

[Deleted User]

Ive always presumed that with tax credits you only have to declare the notional amounts (ie dividend payments on shares if they are over £300, and interest on bank accounts and not any money or interest you have in an ISA if you have one of those) and not the actual amount of shares you own or sell. So if you have over £300 in dividends or other interest on accounts that are over £300 you have to declare what amount you have over the £300. Ie if you have £325 you only declare £25. If you have less than £300 you don't have too declare anything. As they don't include any savings you have if you claim tax credits.
But I have heard this is all going to change with the new UC.
Don't quote me on this though, its just how Ive understood it, I could be totally wrong. Especially as the Tax Credits helpline don't even know!!!

Toffee10

Why can't they make this easier. I even wrote to the tax credits dept, providing them with copies of my p60 and payslip asking them to tell me if my shares would be declared an income. I had no response so when I called them they said my acc was noted with 'no changes needed' but couldn't give me any other details, it doesn't really answer the question! Plus I don't trust them.

So I've read the passage below and my assumption is because I don't pay tax on them as I cash them in after 3 yrs then I don't declare them as they are hmrc approved schemes, and as I'm exercising the shares and not cancelling, transferring or releasing them then I don't count as income. does that sound right??



Save As You Earn (SAYE) share option schemes

These allow employees to save up to £250 monthly from their salary or wages to acquire shares through share options.

Gains from exercising options in this scheme are only taxable if the option was exercised within three years of receiving it and because the company the employee worked for was sold or taken over.

The full amount of any payment received in return for transferring, cancelling, releasing or otherwise not exercising an option under this scheme is also included as income.[/
Approved Share Incentive Plans (SIP)

Previously known as All Employee Share Ownership Plans or Employee Share Plans. These allow employees to buy ‘partnership shares’ from their gross pay (currently up to the lower of £1,500 yearly or 10% of annual gross). Employees may also be awarded free and ‘matching’ shares by their employer. Dividends from partnership shares, free or matching shares may be used to buy further shares called ‘dividend shares’.

The value of any partnership, free or matching shares removed from the plan within three years of acquisition are taxable on their market value when they leave the plan, except where employees leave through retirement, redundancy, injury or disability.

There is a reduced income tax charge if shares are withdrawn between three and five years.

If dividend shares are removed from the plan within three years then there is a charge to tax (under Schedule F) on the amount of the dividend used to buy the shares. After three years there is no charge.

The full amount of any payment received in return for cancellation of the ‘partnership share’ agreement will also be included as income.

Toffee10

But if they aren't trained to tell me what does count as income surely they would have some sort of escalation process to find someone who could provide an answer. It will be them who tell me if I've overpaid

CKhalvashi

The theory of it being income unless it's in an ISA is a good way to go.

Don't rely on this (I will check it in the morning), but I believe that's the correct interpretation.

CK

ETA: Here.