I wonder if anyone may be able to help me on the following:
Almost 2 years ago, I was granted by my employer a number of EMI share options which are approaching their maturity date (2 years after grant). My employer is a limited company whose shares are not listed on any market so there is no definitive market price per share. For the purposes of the EMI screen, the company agrees a notional market value per share with the Inland Revenue each year.
I'm keen to leave the company and move on, but would obviously like to benefit from the share options before doing so (I believe the share options are cancelled if I leave the company), however the situation seems (too me) pretty complicated....
As things stand, I believe I have to pay income tax at my marginal rate on exercising the options between the value of the exercise price, and the value of the share at the time the option was granted (the exercise price is the lower of the two values). Also, under the terms of the scheme, I have to pay any employer's NI contributions arising when exercising the shares.
This is all reasonable enough up to a point but I believe that the value of the shares agreed between the company and the IR at time of the grant was well above its "true value", i.e. the amount you could actually sell each share for in "real life". As such, assuming I can sell the shares on I'm going to take a disproportionate tax/NI hit on exercising the options.
My outlets for selling the shares are limited as the company is fairly niche, most of the current investor's are friends of the directors, so if I approach them I'm assuming I may not exactly be cut the best deal. Equally, I'm reluctant to approach a competitor to offload the shares as this will be a little underhand.....
I just have a few questions about this all really:
Would I still be able to exercise the options assuming I have resigned but still within my contractual period of notice?
Would I have to pay income tax/NI through PAYE at the time of exercising the shares, or could I just pay this when I submit my tax return for the relevant year?
Could I claim back income tax/NI, assuming I were to later sell the shares on at a lower market value than the notional value when the options were granted?
I guess I'm asking, given I will have to exercise the options soon, without the prospect of anyone to sell the shares to in the short term, what do I need to research/take into consideration before deciding whether to exercise or just forget about the whole thing?
Any help or advice would be greatly appreciated.
Cheers