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Where Taxpayers and Advisers Meet

Sale of stock options paid through UK payroll = taxed twice?

Joined:Thu Dec 29, 2016 1:46 pm
Sale of stock options paid through UK payroll = taxed twice?

Postby Lampard » Thu Dec 29, 2016 1:49 pm

I have an equity incentive plan with my current company whereby i have 5000 options. Some have vested, some unvested however we were recently bought out by another company who will allow all 5000 to vest early.

One method suggested for the sale of these is via payroll, like a bonus.

I am just wondering if this means I would be taxed Capital Gains Tax when they sell and then taxed again via PAYE when the proceeds are paid?

Sorry for my ignorance I did a search and have looked online but I cannot understand it and my HR / stock admin department have simply said they are still looking into it and do not have an answer but the deadline for execution is looming (under 2 weeks)

Joined:Mon Jan 09, 2017 4:12 pm

Re: Sale of stock options paid through UK payroll = taxed twice?

Postby AmanSood » Mon Jan 09, 2017 5:53 pm

Hi Lampard, the UK tax considerations vary between the vested and unvested options. For the vested options, the sale will be subject to CGT. For the unvested options which vest as part of the sale, these awards will be taxable via the payroll and subject to UK PAYE/NIC. There would be no capital gains tax as it's treated as a same day sale i.e. the date of vest is the same day on which you sell your shares to the acquiring company. So you won't be taxed twice.
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