CGT or Income Tax on US Stock Options
Options
dsgg10
Posts: 6 Forumite
in Cutting tax
When I started with my current company 7 years ago I was granted some stock @$X per share. Now the company is being partly bought out and the vested options are being bought at $Y. Should this Y-X amount be taxed as CGT or Income Tax?
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Should this Y-X amount be taxed as CGT or Income Tax?
For example, from this paper:There is no income tax charge on the grant of unapproved share options provided they are exercised within 10 years. ... On exercise of the option income tax will be payable on the difference between the option exercise price and the market value of the shares at the date of exercise. If the shares are “readily convertible assets” when the option is exercised (e.g. because the company is being sold), then PAYE must be operated and there will be national insurance contribution liability for the employee and the company on any option gain.
Your employer should be able to tell you how your options scheme is set up, and from that, how tax will operate once your options are liquidated.0
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