Legal Avoidance of Income Tax on Non-qualified stock option

[Muzland]

Hi All,

I heard some time ago that there was a way claiming back the tax paid on a non-qualified stock option from a former colleague.

Does anyone know if this is true as I am about to exercise some of these options?

Thanks in advance.

Best Regards
Ian

[claymore]

I presume that, by non-qualified you mean that the option is held in an unapproved scheme. If so, Income Tax will be payable when you exercise the option on the difference between the value of the shares on the exercise date and the amount you pay for them

There are no loopholes to avoid paying this tax, unless you were not resident in the UK when the option was granted.

Your colleague might have been thinking of a court case a few years ago (Mansworth v Jelley), which determined that the tax paid on exercising an option could be claimed as a cost against in calculating the Capital Gain or loss on subsequently selling the shares. But very few people were able to benefit from that decision - only those who had large Capital Gains against which the resultant loss could be set - and the rules have in any case since been changed. So, I'm afraid you'll be liable to Income Tax when you exercise your option.

[Muzland]

Thanks Claymore,

This was the case my colleague was referring to.

Guess I will just have to pay the tax and be done with it.

Thank you very much for the concise answer.

Best Regards
Ian