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Where Taxpayers and Advisers Meet

tax on stock options for international employees

johnarcher
Posts: 2
Joined: Mon Mar 12, 2018 8:27 pm

tax on stock options for international employees

Postby johnarcher » Mon Mar 12, 2018 8:45 pm

Hi, I have been informed by my company that since 2015 HMRC has been taxing stock options for international employees based on duration in the UK. However, the calculation they have told me makes no sense whatsoever.

Apparently I owe tax for the proportion of the time I was in the UK over the 5 year period. That is fine. However, my grant vests in 4 tranches. I was in the UK for the first 2 years of the 5 year period. They are saying the calculation is I am liable for UK tax on 100% of the first vest (after 2 years) as I had been in the UK the full time, but now I am liable for 2/3 of the second vest because I was in the UK for 2 of the 3 years since the grant. Then apparently it will be 1/2 for the 3rd vest as I will have been in the UK for 2 years in 4, etc. When calculated in aggregate it will mean I will be pay tax in the UK for roughly 70% of the full grant despite being in the UK for less than 40%. If, however, I was in the UK for the last 2 years of the vest rather than the first 2 years, according to their math, I would be liable for tax on less than 10%.

Surely, each tranche vested is its own separate event ? In other words once I have been taxed on the full 100% for the first 2 years when I was resident I cannot be taxed again for the same period in a subsequent vest. However, they insist I am liable for tax in proportion to residency for each vest from time of grant

Can you help ?

Many thanks
John

AmanSood
Posts: 205
Joined: Mon Jan 09, 2017 4:12 pm

Re: tax on stock options for international employees

Postby AmanSood » Fri May 18, 2018 10:01 pm

depends on how the scheme is set up but i believe you have only one date in which you are granted shares and the shares are not granted each year. Hence why the relevant vesting period is grant to vest e.g. year 3 2/3 of the award would be taxable in the UK, year 4, 2/4 of the award etc.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
07792812038


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