Employee share save scheme - how to file on tax return? 11 June 2022 at 3:48PM edited 11 June 2022 at 3:50PM in Cutting tax 3 replies 75 views

ProDave

My wife paid £1400 into a company share save scheme which was wound up last year and paid out a total of £2255 making a profit of £855 paid as one lump sum last tax year.

The scheme was wound up early as her employer was being taken over.  So it appears from the paperwork the funds in her share save scheme were used to buy shares in the company at the preferential rate, then immediately sold at the market value.

We have entered this on her self assesment on line tax form under a section about company share schemes, but it seems to be treating this as "income" and taxing her at the normal tax rate.

Is that the correct place to enter that?

It does not sound right to me.  If I bought some shares and then sold them and made £855 profit, I would expect to be entering that as a capital gain in a different part of the tax return, and as it is well below the capital gain allowance and I made no other capital gains, there would be no tax to pay.

The hmrc guidance just confuses us even more.  So where should it be entered on the tax return please?

Jeremy535897

Her employer should advise, but I would have thought that if it was liable to income tax (perhaps because of early encashment), the employer would have deducted tax.

ProDave

Thanks.

It has been hard to find information on this scheme, because nothing has been done with any "paperwork" it's all on line documentation which has taken some searching.

The payout was not done through her payslip but a one off payment into her bank account.

Anyway we found one document from the scheme administrator, Equinity or something like that, advising it should be treated as a capital gain and will only be taxable if it exceeds your capital gains allowance (or you have made other capital gains) so on that basis that is how we will treat if for the tax return and refer to that document if there is ever any dispute.

Jeremy535897

It wouldn't even need entering on the tax return, unless your wife has made other chargeable disposals. Gains only need to be declared on her tax return if, in total, proceeds exceed £49,200 or gains exceed £12,300.