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Posted Sat, 04 Mar 2023 20:18:28 GMT by Damion Yates
Firstly, you may or may not know know but large multinationals often provide their UK staff with company shares which vest through the year as part of a compensation deal. I know of >5k people in my own employment and have friends in other large companies in this (tech: Meta, FB, Apple) and other sectors (banking: Morgan Stanley, etc) all with similar systems. This is likely at least 10k people if not many tens of thousands of high tax payers in the UK. No pressure HMRC Admin XX but your answer here is useful and important to thousands of us :) Feel free to escalate and confirm the official response. The vests are taxed as income and about 47% of the stock is taken away for the maximum tax level. The remaining shares stay in the broker unless you sign up for an auto-sell option. Due to insider knowledge (materials nonpublic information), there are blackout windows for those selling manually and strict rules on the timing for when you sign up for "auto-sell" after which you can't cancel for a year either, so you have no control over the sales. The vest and sales are in USD but as *some* of us (out of 10,000s of people) know how to do this properly we use the value of these stock in GBP at the vest/sale events (potentially using HMRC's provided monthly exchange guides). The vests are often monthly which is a pain because months vary between 28 and 31 days - this is important due to the 30-day B&B avoidance rule. (note: The brokers in question are typically in the USA have haven't got a clue about UK tax rules, the user interface shows irrelevant gain/loss based on specific shares, i.e. no knowledge of Section 104 mean - I know 1st hand that UK people don't understand this as this is all new and confusing to everyone who starts working in these companies). Manual stock sales need tax calculations. (Note: over the years I've learnt via threads of misc email lists at work indicate a distressingly high number of tax accountants make mistakes or simply don't understand these US share systems and UK rules). Same-say/30-day and s104 matching are all taken into consideration etc. At least some of us sort this correctly, I can't speak for everyone. But I do know that almost nobody ever owes capital gains tax as most of us intentionally stay under the gain limits. A lot of us do however have to report because that's just 4x the gain limit. HMRC presumably receive 10,000s of tax returns containing £0 owed but pages of stock numbers. Now we come to Auto-sell: So... when somebody signs up to this scheme, they receive the vest the same as everyone else, however in this case those "same shares" are then sold. They had no control over them, there is effectively no gain/loss reported by the broker - however... due to things like the US timezone and other administrative complications, the actual point the sale takes place is after midnight in the UK!!!! So my question is whether HMRC consider this a same-day match, shares purchased and all of them immediate sold? People are very clearly following the spirit of the law here as there is no intent to gain/lose with sales which are out of your control. If not, then it's a complicated mess. The purchase (vest) occurs, then a sale follows, the cap.gains is not calculable / documented. And before you comment that it'll clearly be under the £6k limit (from next month), for many earners it will also be over the reporting limit, even with £0 owed. The next vest might be 28-31 days away so on some months you need to match against the new vest and other times against a s104 pool! This is a messy nightmare impacting many people wanting to opt for auto-sell but scared to due to the tax mess. **** Please can you tell me that it makes sense to consider auto-sold stock as same-day ? **** Alternatively please consider escalating up to HMRC that the reporting limit is too low or should not be needed if the gain is clearly close to £0 -
Posted Tue, 14 Mar 2023 15:04:57 GMT by HMRC Admin 19

We can confirm that S28 TCGA provides that the time at which the disposal and acquisition is made is the time the contract is made.

Time in respect of our capital gains legislation is always Greenwich Mean Time (GMT) or British Summer Time (BST) as appropriate. So, where the same day rule at s105(1) TCGA refers to the same day, this refers to the same day in the UK.

Regrettably, HMRC cannot agree that shares acquired before midnight in the UK and then sold after midnight in the UK are transactions on the same day, as when we look at the time of acquisition and disposal in GMT/BST they are on different dates.

Thank you.
Posted Wed, 22 Mar 2023 02:07:39 GMT by Damion Yates
Thank you for this reply, it is unfortunate but not unexpected. I was hoping the contract to sell having been locked in at the start of the year, could possibly be considered as that's separated by months from the time before the actual sale. Further that unwitting UK taxpayers are in complete fairness following the spirit of the same-day rule despite technicalities preventing actual same-day due to how the real world works. Do you have any suggestions as to how the capital gains rules could be adjusted to take into consideration the significant number of employees in the UK working in multinational companies who offer shares as part of the compensation package? I assume this forum and the helpful people I occasionally speak to on the HMRC helplines, are unlikely to help make any fundamental legal changes to the UK tax legislation. Could you please pass this to the powers that be, or provide details here of a contact that could consider this. There are a couple of extremely simple amendments to the existing rules which it would be useful for HMRC to consider, either one of which would prevent complex calculations*, or... more likely, unwitting misreporting on tax returns by thousands of people: + Company arranged, share auto-sell systems to be considered same-day + Remove the reporting requirement on 4x cap.gain limit if the gain is trivially low *Where I work we have an active internal forum discussing matters like this and over the past number of years, we've developed internal tooling to assist in this unfortunate setup using exports from the US-centric brokers. I can't guarantee and in fact expect, that potentially tens of thousands either don't know and aren't reporting, or are wasting hours creating details reports each year which are either skipped/accepted, or occasionally audited wasting HMRC's time too as no tax is due.

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