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  • RE: Restricted Share Units - When is a taxable event?

    Hello. Thank you for your reply. I am not seeking advice regarding exact calculation in this thread. Might it be helpful if I ask differently? What is a taxable event (for income tax and national insurance) for restricted stock units, if the grant acceptance by an employee happens after the vesting date, and also the distribution happens after the vesting (and the grant acceptance) as described in my original message in this thread: i.e., like, the distribution does not happen at the vesting due to a blackout period with the employer; the blackout period finished later, and on the same day as the blackout period ends (or maybe in the next few days) the distribution happens, enough shares are sold (as arranged by the employer) to cover taxes that are calculated at the price of the distribution; then the employee can do what they want with the remaining shares (to keep them or to sell); and the employer would report taxes to HMRC (and pay them); (the employee couldn't do much with the shares until after the distribution; there was a restriction due to the blackout that did not allow the employee to do much) ? Could you help me with that, please? (The guidance that was provided earlier in this thread (for Capital Gains Tax; and then for Capital Gains Tax, separation and divorce) is not applicable, as far as I can tell.)
  • RE: Restricted Share Units - When is a taxable event?

    Thank you. As per my previous message, my question is about tax on 'income' (income tax and national insurance), not Capital Gains Tax. You sent me guidance on Capital Gains Tax, for separation and divorce. I am sorry, I am not sure how separation and divorce is relevant. Could you help me in regard to tax on 'income' for this, please? (Not for Capital Gains Tax.)
  • RE: Restricted Share Units - When is a taxable event?

    Thank you for your message. The link you shared is about Capital Gains Tax, as far as I understand. I am sorry, my question is about tax on 'income' (income tax and and national insurance), not about Capital Gains Tax. Could you help me regarding that, please? (The example above is simplified, but I think it has all necessary information for asking for advice.)
  • Restricted Share Units - When is a taxable event?

    Greetings. Could you help me, please? I am providing below an example. It is not a theoretical/hypothetical example, it is based on a real event, but I change some details (like dates) for anonymity. 1st of February 2021 – a grant date for 1,000 restricted share units (RSUs) for an employee with a UK company (the employer). 1st of February 2022 – a vesting date for those 1,000 RSUs; the price per share is £50. The distribution does not happen due to a blackout period with the employer. 1st of May 2022 – the employee accepts the grant (the grant was not accepted before). 1st of June 2022 – the blackout period finished. The price per share is £1. On the same day (and maybe in the next few days) the distribution happens, enough shares are sold (as arranged by the employer) to cover taxes that are calculated at the price of the distribution (i.e. the price of £1 per share). The employee can do what they want with the remaining shares (to keep them or to sell). The employer would report taxes to HMRC (and pay them). What is the taxable event in this case? Is it the vesting or the distribution? Generally, it seems on Internet it says that the taxable event is vesting for RSUs, however, is it the case in the scenario above? The employee couldn’t do much with the shares until after the distribution. There was a restriction due to the blackout that did not allow the employee to do much. Should the taxable event be the distribution? (Like, with stock options, the tax is due with an exercise not with vesting, as far as I can tell.) The difference in taxes for the employee can be very different. In the example above, assuming tax rate of 40%, it can be £20,000 - £400 = £19,600.
  • RE: Stock options, shares and tax

    Thank you. 1. Could you advise me, please, is it correct to say that an employer or ex-employer is responsible for paying the right amount of tax and for reporting everything? That is, there is nothing that I should pay or report to HMRC myself, maybe except for self-assessment if applicable? 2. If the employer does not pay the right amount of tax, who is responsible for paying this tax: the employer/ex-employer or the employee? 3. Could you advise me, please, is it correct that the income tax can be reduced for the employer national insurance? For example, if there are 1,000 options, and they are exercised at £1 each, and the exercise price is £0, and e.g. the income tax is 40%, and the employer national insurance rate is 13.8% (for the current tax year), then the income tax will be: 1,000 options x 40% x (100% - 13.8%) = £344.8 Is this correct? 4. Could you advise me, please, whether the income tax or/and the employee national insurance or/and the employer national insurance can be reduced for the exercise price for each option? 5. For a so-called ''sell-to-cover' exercise of options, i.e. if options are exercised and then the shares (from the exercised options) are sold 'immediately' to cover the tax, what should happen with the tax if shares are sold at different prices? For example, let's say there are 2,000 options, they are transferred into shares, and then 1,000 shares should be 'immediately' sold to cover the income tax and the national insurance. However, the 'market' can buy only 300 shares at £1.00 and then the 'market' can buy the other 700 shares only at £0.90. Let's say all of this happens on the same calendar day. Would it be correct to use the share prices of £1.00 and £0.90 proportionally for 3/10 and 7/10 of the options respectively when calculating and paying the income tax and the national insurance? 6. If shares are sold in another currency (e.g. USD), what exchange rate should be used for the tax purposes (for the income tax and the national insurance)? Are there different options that can be used?
  • Stock options, shares and tax

    Background: I have been an employee and I was given stock options (i.e. options to buy company shares). There has not been any applicable tax-advantage share scheme as mentioned on https://www.gov.uk/tax-employee-share-schemes/company-share-option-plan. Because of that, when and if those stock options are exercised by me, income tax and national insurance should be paid on the exercise. I plan to exercise all stock options and receive shares. At the 'same' time (i.e. 'immediately' after the exercise), I plan to sell only a part of shares to cover taxes and to keep the remaining shares. All of this is to be arranged by my employer (potentially, with an involvement of a third-party facilitator). Questions: Could you help me, please: Who is responsible in such a case for paying the required amount of UK tax (income tax and national insurance)? What if my employer pays less UK tax than necessary? For example, let's say there are 100,000 options, they are valued at the time of exercise at £10 each, so the total value is £1,000,000. Let's say the necessary amount of tax is 50% but the employer pays only 40% by 'mistake' (and 60% is kept by me in shares). As a result, there is £100,000 tax underpaid. Who is responsible for paying that tax and how soon? If it is not the sole responsibility of the employer to pay the right amount of tax, what happens if e.g. the share price drops from £10 to £0 quite quickly? (Please, note that my question is not about 'loss' in regard to any capital gains but it is about the liability in regard to income and national insurance tax after the exercise of options.)