Tax on company share options

Aug 12, 2005 4 Replies
L

Hello,



Next year, I will be able to exercise some options, in the form of approved CSOP shares (up to £30k), and unapproved.



I understand that I don't have to pay income tax on the approved plan, but might have to pay on the unapproved plan. I also understand that I don't pay capital gains on the first £8k of profit.



How can I reduce the tax? Can I transfer £8k portions to different family members (wife, mother-in-law, father-in-law, brother-in-law, as long as they are not receiving anything already which will fall within the £8k allowance)? Does it matter if they live outside the UK but within the EU?



When do I need to do this? Do I do it before I exercise the options? How can I do this?



Any info appreciated.



Cheers



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P

Pay the tax. Spurious "transfers" will not help.

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D

If the scheme rules allow, an inter-spousal transfer might be advantageous.

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L

Thanks Doug. Any idea what the rate of tax is on the amounts outside the allowance (£8k)? Is CGT 40% in that situation?

Also, any idea if it is taxed at source or will I need to send the money to Inland Revenue at the end of the year?

Cheers

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D

Also, any idea if it is taxed at source or will I need to send the money to Inland Revenue at the end of the year?

Cheers

The CGT exemption limit for 2005-06 is 8500.

The net relevant gain is added to one's income to determine the rate of CGT applicable.

The CGT rates are 10%, 20% and 40%.

If one is already a 40% taxpayer, the CGT is 40%.

You normally have to send the relevant tax to HMRC - for 2005-06, this would be by 31 January 2007.

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