LTIP and earnings over £100k

Coco2024

@[Deleted User] 
Thanks. I really hope it is done through PAYE as it will save me lots of worry about paying the correct tax and self assessments! 

I am expecting I will lose some of my personal allowance now unfortunately. Will my company deal with that too or does that require self assessment? 

Dazed_and_C0nfused

Coco2024 said:

@[Deleted User] 
Thanks. I really hope it is done through PAYE as it will save me lots of worry about paying the correct tax and self assessments! 

I am expecting I will lose some of my personal allowance now unfortunately. Will my company deal with that too or does that require self assessment? 

I think you've misunderstood how PAYE works.

HMRC allocate a tax code at the start of the tax year and your employer uses that.

It's possible things change during the year which means you will owe extra tax, PAYE doesn't mean you always pay the correct amount during the year.

To keep things up to date you should ensure HMRC are using as accurate information as possible.  For example when they calculated your 2023-24 tax code they may have estimated you would earn £85k (taxable earnings).  But if you know the correct figure will be say £110k then you can update that on your Personal Tax Account and HMRC will check if your tax code needs changing.

Your employer would then use any new tax code but it's not their job to check if the code they have is correct or not.  All they know is that your code is say 150L or 0T or K125.  They don't know why it is that particular code as HMRC don't share that level of personal information with your employer.

Coco2024

Thank you all for your advice and guidance - it is very helpful. 

Ammah45

EdSwippet said:

Ammah45 said:

Coco2024 said:

@Ammah45 I think it's irrelevant whether I sell them or not. It's the value I am being given (~£4k) that is counted as income. Once they are given to me (in March) I am classed as having the income, even if they sit as shares in a share account. If I subsequently sell them, then it is no longer income tax but Capital Gains tax I would need to consider.

Ok, that's not how mine works but I guess they are all different. I only get taxed when I exercise the sale and cash the shares. 

From reading between the lines, it appears that you have been granted stock options, but the OP has RSUs (restricted stock units). They are different things:

Restricted Shares vs. Stock Options: What's the Difference?

Restricted shares and stock options are both forms of equity compensation, but each comes with some conditions.

Restricted shares can either be restricted stock units or restricted stock awards. Both involve vesting requirements. For instance, restricted stock awards deliver shares outright, along with the rights and privileges of a shareholder. Their owner may receive dividends and vote at the annual meeting. However, the company may reserve the right to buy back unvested shares if the employee leaves the company.

Stock options give an employee the right to buy a certain number of shares at an exercise price in the future. Like restricted shares, stock options often have vesting requirements. The employee may get a windfall if and when the company's stock price exceeds the exercise price and they exercise the options.

Yes ours are LTIP as stock options, and we can buy the shares at very cheap price (0.01 USD). Sorry for the confusion