Treatment of Disqualifying Dispositions of Incentive Stock Options

Hello, We received this form our parent company in the US: 'Two employees had “disqualifying dispositions” of (ISO options) because they sold these ISO shares before the end of the required holding period one year from the date of exercise. Therefore, a taxable gain has arisen from this sale as outlined below needs to be reported as “ordinary income” in 2024 and shown on their YTD payroll tax documents (P45). (no withholding/payroll taxes need to be deducted through payroll).' How do we treat these for payroll purposes? or should the employees account for them on their Self Assessment tax return? We cannot add to an employees taxable pay without there bieng a tax liability to be paid?

Hi Lesley Aitchison,
This wouldn't generally be an enquiry for the Employer's Helpline.
If you are unsure of the reporting requirements of this particular type of share and need confirmation on whether it is reportable via Self Assessment or through RTI reporting, I would advise you to contact our Shares & Valuation Helpline who should be able to assist further.
Shares and assets valuations
You can also visit our website here: Tax and Employee Share Schemes
Thank you.