Stock Options Buy-out: income tax Vs capital gains

dgerrard

The American company I work for was recently acquired.  I have 7000 stock options unexercised in an EMI scheme.  The acquiring company is buying these out, and if my math's right it would be roughly £30000 pre-tax.

One of my colleagues has raised the spectre of income tax VS capital gains.  The advice I've seen online is: "If an acquiring company buys out your unexercised EMI options, the payment you receive is typically taxed as employment income. This is because the options have not yet been exercised, so they are not treated as capital gains."

The moment the deal was announced we lost our ability to exercise our options so that's not a possibility.

As the difference is pretty steep, £3000 capital gains Vs £12000 income tax: anyone have any interesting suggestions for how I can minimise the amount I'm taxed on this? Payout is meant to happen at the end of this month.

Frustrating, as it means ex-employees who exercised will get a much nicer net pay than those of us who stuck around.  Ah well!

It's still a large amount of £££ that I wasn't expecting, so I can't be TOO "woe is me" 😅

Keep_pedalling

Paying as much of it as you can into a pension is the only option I think.