LTIP - Tax reclaim? (Scotland)

HibbyAndrew

My wife was awarded a chairmans award by per employer (Long Term Incentive Plan). She has since retired during the last tax year. We waited until the current tax year before exercising and holding her shares. At time of exercise we paid the administrator the estimated tax. During this current tax year she will minimise her income below her personal allowance.

The Share Administrator advised as follows:

Tax Event : Tax at exercise

Tax Qualification : Nonqualified

Applicable taxes : Flat rate tax for individual 44%

The documentation simply says "Income tax will be due at your marginal rate of tax"

The administrator have not been particularly helpful, and simply advise that we should query with HMRC.

I would have expected that no tax would be due as the value of shares is aprox £6000 i.e. well below the personal allowance

Can anyone advise how the tax requirements for exercising LTIP should work? & how we can recelaim the tax paid (if it is incorrect)

Thanks in advance

Isthisforreal99

Not sure what you mean by "we paid the administrator the estimated tax'? Do you mean they deducted it and paid it over to HMRC?

Does the payment and tax deducted show in her personal tax accouunt?

HibbyAndrew

We were given 2 choices, either :

a/ the taxes would be taken from the value of shares (i.e. we would receive approx 50% of the shares)

or

b/ pay the taxes and receive the full quantity of shares

We took option (b) & paid the calculated tax directly to the administrator (equate).

Her equate account shows the payment as "cash received for settlement - taxes"

Payment is not shown in her HMRC gateway but it does estimate her income at approx 60k£ so I wonder if this has complicated the tax. If this is the case, how do we fix it ?

Dead_keen

Ok. So your wife had a non-tax advantaged share option which she exercised in the current tax year (2026/27) realising a gain of £6,000. She did this by paying (i) an exercise price (presumably), and (ii) an amount to cover the PAYE and NIC on exercise. She basically has zero other income this year and so you expect a tax refund.

Her former employer had an obligation to operate PAYE/NIC on the option gain on (i) a non-cumulative basis, and (ii) on the assumption that she has no personal allowance. On her numbers, this will mean some PAYE will have been withheld at 19%, 20%, 21% and 42% (and some NIC if she is below state pension age). Her former employer should give her some details of the PAYE/NIC withheld.

To get the PAYE back your wife would need to (i) complete a self-assessment tax return if she is required to do one for other reasons, or (ii) claim it directly from HMRC - https://www.gov.uk/guidance/claim-for-a-refund-if-youve-paid-hmrc-too-much-on-your-paye-bill

It is not possible to get the NIC back.

HibbyAndrew

Many thanks Dead Keen. Thats pretty much what I thought but your explanation makes it easy to understand