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Posted Sat, 16 Apr 2022 07:31:48 GMT by Option 01
Hi Can anyone provide guidance on Tax treatment on the following: UK resident employed by 100% UK Subsidiary, granted share options directly in the US parent private company. These are Non Quaified share options (ie unapproved scheme.) On Exercise are these taxed via Self assessement under foreign income section on SA or via PAYE by UK Subsidiary? The UK employee exercise the options and sells to a US private buyer on the same day Exercise price $1.00, independant 409a valuation $80 private sale price $120 If PAYE , is it the 409a Valuation of $80 or is $120 deemed the market value for PAYE? Is a UK vauation of the company shares required to determine the market value to UK PAYE purpose? If the company did a private funding round and the equivalent price was $140, would that have any bearing on the market value
Posted Fri, 22 Apr 2022 14:55:05 GMT by HMRC Admin 11
J J,
Guidance on valuations can be found in:
It would appear that the shares are made available by reason of the employment so the UK subsidiary would operate PAYE and NIC:
Thank you
Posted Sun, 24 Apr 2022 08:14:48 GMT by Option 01
Can anyone give guidance on the value to use for the PAYE /NIC element to calculate the benefit event for tax Would it be 1) 409A valuation, as that is the price the company is using for US share option but back 2) the $120 which is the private sale price independent of the company, ie exercise and buy from company then sell on same day to private buyer 3) the $140, value base on private funding round
Posted Mon, 25 Apr 2022 13:52:44 GMT by HMRC Admin 17

Thank you for your enquiry, I have attached our webpage covering Tax on shares :

Tax when you sell shares    .

If you want to discuss this further please call us on 0300 200 3200.

Thank you.
Posted Wed, 27 Apr 2022 14:39:42 GMT by Option 01
The information sheet is too generic as is the helpline number Can some please provide further guidance on 1) Which value is used to report via PAYE , the 409a valuation of $80 or the $120 2) if $80 the difference between the final $120 and $80 be reflected on self assessment as income tax not CGT 3) the $140 price is not relevant
Posted Wed, 04 May 2022 12:51:03 GMT by HMRC Admin 20
Hi Option 01,

We have provided the relevant guidance at ERSM220130 in our previous reply.
It is up to the employer to use the relevant facts to decide the relevant valuation for PAYE purposes.
For example if the employer arranged or was aware of the sale of the shares to the private buyer on the day the option was granted, this may indicate where the valuation may lay.

ERSM220020 - Valuation Issues Basis of valuation.

The sale of the shares will give rise to a potential capital gains charge.

Thank you.

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