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Where Taxpayers and Advisers Meet

Tax to be paid on company stock?

Posts: 1
Joined: Wed Mar 13, 2019 12:31 pm

Tax to be paid on company stock?

Postby Kraig » Wed Mar 13, 2019 12:47 pm

Hi All,

My first post! I did a quick search for this and couldn't see anything recent or relevant. This is my situation and I wonder if anyone could advise?

In short, I work for a company based in London (who's head office is in Washington DC). Our share price is $460 per share.

All employees receive 2 shares at 5 years service as a thank you. We do not pay for these. In Dec 2017 - I received 2 shares (then valued @ $290 per share). These came automatically vested and are now worth $465 per share (x2).

In addition to accruing my 2 shares in December 2017 (my 5 year anniversary) - I then relocated offices (from Glasgow to London) in September 2018 and as part of that, they offered me relocation package inclusive of $33,180 worth of shares - which was 79 shares @ $420 per share. Again, I did not pay for these. These will vest over a 4 year period (eg. 19 shares in Sept 2019 and then 20 shares in Sept 2020, 21 & 22).

Lastly, I was then awarded another 25 shares @ $411 per share in February 2019 - these will also vest over a 4 year period - I'll get 6 in Feb 2020, 6 in 2021, 6 in 2022 and 7 in 2023.

Now - in short, I have NOT PAID a single penny for any of this. This is where I get confused because when I look on the Gov.UK website - it talks about paying tax on profits. Is all of this profit as I didnt invest any of my own money? or... does the profit only come from the difference between the share price the shares were awarded at vs the share price at the time I cash them in?

I am just pretty lost. I am also not sure if it matters if I am awarded shares for tenure, vs shares for a relocation package vs shares for a bonus.

Any help would be appreciated.

All in all, I have a share value balance of c. $50,000. I assumed I'd pay 40% tax on this as if I cash it in, I'll just pay the higher rate of income tax on all of this - but I have no clue.

Thank you in advance.

Posts: 743
Joined: Fri May 16, 2014 3:47 pm

Re: Tax to be paid on company stock?

Postby AGoodman » Wed Mar 13, 2019 4:58 pm

By default these arrangements are usually subject to income tax as they derive from your employment. Taxation of these arrangements get complicated and you might have been able to improve your position by a s.431 election. Unfortunately you are likely out of time but it is worth checking what is possible for these and any future stock you receive.

Any chance your employer could fund some tax advice? There could also be tax/NI issues for your employer so they should be thinking about these things anyway.

Others will have more knowledge on this than me.

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