Paying income tax on company shares - not liable for CGT?

WhiteCircle

Hi,

The company I work for has given me free shares a couple of times over the years. Not paid a penny for them. The company has now been acquired, and I will be receiving £14,220 in my next payslip. The company has told me that "Because of the nature of the option scheme, it has to be taxed as income through payroll, somewhat like a bonus." Does that mean it won't be liable for Capital Gains Tax? Is there anything else I should know?

Many thanks,

poseidon1

WhiteCircle said:

Hi,

The company I work for has given me free shares a couple of times over the years. Not paid a penny for them. The company has now been acquired, and I will be receiving £14,220 in my next payslip. The company has told me that "Because of the nature of the option scheme, it has to be taxed as income through payroll, somewhat like a bonus." Does that mean it won't be liable for Capital Gains Tax? Is there anything else I should know?

Many thanks,

Sounds like you were a member of an unapproved share option scheme. As such and because the shares were in this case compulsory acquired on takeover, you receive the net cash after PAYE and nic, with no further personal tax liabilities -  see below

https://share.google/9AqWzNS4M8T9qE3nP

Could be a painful tax deduction if it puts you into 40% tax. You might wish to explore if you can make a lump sum pension contribution to mitigate the tax damage, and improve your pension prospects.

WhiteCircle

Thank you so much for replying. I thought similarly. Thank you for the link. Yeah, it's going to be a painful tax deduction. I asked whether they could pay it directly into my pension, but they said it wasn't possible :-(