Employee ESPP programs

StevenO

Hi Chaps,


I find it ridiculous that I have to ask this on a public forum rather than my company but alas, even the tax office when I called wasn't clear on what happens.


I am just enrolling in a company stock purchase plan / incentive.


It is an approved UK plan, but managed by the US company. The trading account is also in the US.


I plan to contribute a % of my salary into the plan over the next 12 months. The % is taken after tax and NI deductions have already been made by the UK subsidiary.


At the end of 12 months they award company shares in the plan at 15% discount to the current fair market value.


When I exercise or sell these shares I am trying to find out what my tax obligation is, which I would assume was a simple question for my company or HMRC, it would appear not.


I assumed whatever gain is made (IE the 15% discount I have gained during purchase) will need to be filed on my tax return / self assessment for that year and the tax man will send me a nice bill for 40% (as my tax free an lower tax is already all used up on my PAYE scheme, and I pay 40% on a portion of my salary already, hence additional earnings or income will also be in the 40%).


So therefore, lets say I put £500 a month in to the share save scheme after tax and NI is deducted, at the 12 month plan end I have £6000. The FMV of the shares are $30, I pay $25.5 per share. I've made £900 through the scheme, so the tax man wants his share of £360 (40%) of the difference in value.


I assume this goes on my end of year tax return as an income then he sends me a bill by January (along with everything else they like to take).


Now, my company has said that there are certain conditions where I would not need to pay any tax on the approved UK scheme but they can not tell me specifics and to seek advice.


I contacted HMRC, they say I only pay capital gains over a certain % allowance on an approved UK scheme and this would come under a SIP scheme, and if the shares are kept in the plan for 5 years.


Totally confused right about now. I don't know if and when I pay tax or if I do on such an amount now.


Any help from people with experience of this greatly appreciated.