tax liable on shares

aubreym

hi all,

selling shares that i bought in an employee scheme.

I have the shares in my account, but have to pay tax on them, even though i have not sold any of them. What is the rate of tax that i have to pay the revenue on the gain that i have made?

I was always under the impression that it was 41% , but the revenue website & documents says its 20%,

ie, Shares on day of issue were $18, but discounted price i got them at was $15. So 100 shares at $3 profit per share = $300. so is it 20% or 40% of $300 that i have to pay revenue?

thanks,
aubreym

Raskolnikov

aubreym wrote: »

I have the shares in my account, but have to pay tax on them, even though i have not sold any of them.

Capital Gains Tax doesn't apply until you actually dispose of the asset.

aubreym wrote: »

I was always under the impression that it was 41% , but the revenue website & documents says its 20%,

ie, Shares on day of issue were $18, but discounted price i got them at was $15. So 100 shares at $3 profit per share = $300. so is it 20% or 40% of $300 that i have to pay revenue?

Whatever Revenue source you're reading, it's incorrect.

Capital Gains Tax is now subject to taxation at 25% - http://www.citizensinformation.ie/categories/money-and-tax/tax/capital-taxes/capital-gains-tax/#rules

Remember, you have an allowance of €1,270 (or €2,540 if you're married) every year. It's not a whole pile, but if your circumstances allow it, you can spread the disposal of your shareholding over a few years to avoid taxation.

Barney Magoo

Raskolnikov wrote: »

Capital Gains Tax doesn't apply until you actually dispose of the asset.

Remember, you have an allowance of €1,270 (or €2,540 if you're married) every year.

You cannot ordinarily use your spouse's allowance for capital gains made on your share disposals. In other words the allowance is not €2,540.

Raskolnikov

Barney Magoo wrote: »

You cannot ordinarily use your spouse's allowance for capital gains made on your share disposals. In other words the allowance is not €2,540.

I should have elaborated.

You can transfer the asset to your spouse tax-free, which she can then dispose of, using her allowance.

UpAgainToday

aubreym wrote: »

hi all,

selling shares that i bought in an employee scheme.

I have the shares in my account, but have to pay tax on them, even though i have not sold any of them. What is the rate of tax that i have to pay the revenue on the gain that i have made?

I was always under the impression that it was 41% , but the revenue website & documents says its 20%,

ie, Shares on day of issue were $18, but discounted price i got them at was $15. So 100 shares at $3 profit per share = $300. so is it 20% or 40% of $300 that i have to pay revenue?

thanks,
aubreym

So you have to pay tax on shares just sitting in your account that you havent sold yet? I know nothing about tax since I dont deal with it but is there a chance your paying CAT since you got them at a reduction??

Since you cant pay CGT until you have actually sold them?

josey_whale

UpAgainToday wrote: »

So you have to pay tax on shares just sitting in your account that you havent sold yet? I know nothing about tax since I dont deal with it but is there a chance your paying CAT since you got them at a reduction??

Since you cant pay CGT until you have actually sold them?

You only pay tax on the gain.... Until they have been sold you havent made anything. Once you sell them you pay tax on what ever your gain is. So lets say you sold your shares and your gain was €100.

Your tax liability is now 25% of €100 = €25

UpAgainToday

josey_whale wrote: »

You only pay tax on the gain.... Until they have been sold you havent made anything. Once you sell them you pay tax on what ever your gain is. So lets say you sold your shares and your gain was €100.

Your tax liability is now 25% of €100 = €25

Thats what I thought but OP seems to think he has to pay tax on them now?

cooperguy

Is it Benifit in Kind tax that is due now by any chance? So not a tax on the profit made from selling the shares but the tax on the "free" bit he got with the reduction in share price?

BESman

aubreym wrote: »

hi all,

selling shares that i bought in an employee scheme.

I have the shares in my account, but have to pay tax on them, even though i have not sold any of them. What is the rate of tax that i have to pay the revenue on the gain that i have made?

I was always under the impression that it was 41% , but the revenue website & documents says its 20%,

ie, Shares on day of issue were $18, but discounted price i got them at was $15. So 100 shares at $3 profit per share = $300. so is it 20% or 40% of $300 that i have to pay revenue?

thanks,
aubreym

You need to clarify some points:

1. Is it a Revenue Approved Share Option Scheme (ASOS) or an Unapproved Share Option Scheme?

2. If Unapproved scheme, do you have a short option (<7 years) or a long option (>7 years)?

Under an ASOS, employees will not be chargeable to income tax on the exercise of the share option but will instead be chargeable to Capital Gains Tax on the full gain (difference between the amount paid for the shares and the sale amount received) on a disposal of the shares, but the employee must not dispose of the shares within three years of granting the option. CGT is 25% and there is an exemption on the first €1,270.

Under an unapproved scheme, short options must be exercised within 7 years of being granted. Short options are charged to income tax in the year the option is exercised on the difference between the price paid for the shares and the market value of the shares at the date of exercise.

Long options are capable of being exercised more than 7 years after being granted. Long options are taxed in the year they are granted (on the difference between the market value of the shares at the date of grant and the option price) and are also taxed in the year the option was exercised, but the shareholder is entitled to a credit for the tax paid on the earlier charge on grant.