Tax on company stock option

[sb123]

My company recently floated on the NYSE. As an employee I have received a stock option to purchase a set number of shares at a pre specified price. I am trying to understand, if I exercise that option and buy the shares now, what my tax liability would be. My option allows me to buy shares for $65,000. The value of those shares based on the companies current price will immediately be $337,000.

I am on a PAYE contract, so I am trying to work out will I immediately be taxed on the gain and will I pay income tax on the value.

I am a UK citizen / resident and don't have any additional income outside of my PAYE salary received by the company.

Thank you in advance

[darthblingbling]

Typically the difference between the price you pay for the stock and the market value at exercise will be treated as employment income and you will be liable to Income tax. Also you may be liable to Class 1A NIC as the stock is a readily convertible asset.

Usually a number of shares will also be sold to cover the cost of the tax as no CGT should be due. This is because the cost price is taken as the market value at exercise. You're then of course free to sell the rest of the shares at the same time and not worry about CGT. If you sell the remaining shares at a later date then you may suffer some CGT if the value has gained.

[kwiji]

Sorry to drag up an old thread but I'm interest on the Market Value rule for estimating income tax on purchasing options:

I have options in a US Company NSO Stock options (I work in the UK for that company). My purchase price is currently well below the price on the New York Stock exchange.
I have to pay income tax on the difference in value between my option purchase price and the "market value at exercise"...

The Market Value of exercise is confusing, my company will take X% when I purchase my options automatically and submit to HMRC, but I read that the "market value at exercise" is actually the close price of the company shares that day (New York Stock Exchange)..

So if I exercise at 2pm US time the tax actually due is Income Tax Rate % * Fair Market Value at the end of the NYSE Trading day.. Is that correct?

(So if the share price drops significantly between me exercising and the close of day I will get a refund when submitting my tax return?)

Example:
Options 100, Purchase price $1
Current NYSE price $10

Purchase 100 options at 2pm when stock price is $10..
Company withholds ($1000Market value - $100Purchase price ..... $900 X 0.45tax = $405 Tax withheld)..

However at 4:30pm the share price drops to $2... ($200market value - $100purchase.... $100 X 0.45 = $45 Tax should have paid)

I've overpaid (My company has overpaid for me) $360 worth of Tax correct?