Share Options - tax question

TheDuke

Hi all,

I received share options which vest over time. I never bought any and as such do not have any financial returns from these options (no dividend, nothing).

Do I need to declare these as part of my tax?

Thanks in advance for any advice,

P

John Conlon

You normally only need to account for tax on an option when that option is exercised. This is the point at which the share is yours to sell.

The exception to this is when the option lasts longer than seven years i.e. if you have longer than seven years to exercise it from date of grant.
If this is the case you declare at date of grant. you also declare at exercise and get a credit for tax paid at grant date.

this is because the long option gives you the benefit of greater flexibility.

John Conlon

You normally only need to account for tax on an option when that option is exercised. This is the point at which the share is yours to sell.

The exception to this is when the option lasts longer than seven years i.e. if you have longer than seven years to exercise it from date of grant.
If this is the case you declare at date of grant. you also declare at exercise and get a credit for tax paid at grant date.

This is because the long option gives you the benefit of greater flexibility.

TheDuke

Many thanks John,

That is really helpful and clarifies the confusion.

If it is ok I'll go a step further.

The stock option has a time best vesting schedule with 50% based on time and 50% on company performance at that point in time and runs over 5 years.

However, the time of grant to expiry is 10 years.

Hence, I presume then this is a 7+ y scenario?

Thanks again,

P

TheDuke

actually this now makes a lot more sense now that i re-read it.... thanks again

"Tax treatment of shares acquired by employees and
directors under Unapproved Share Option Schemes"

http://www.google.ie/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&ved=0CGoQFjAD&url=http%3A%2F%2Fwww.revenue.ie%2Fen%2Ftax%2Fit%2Fleaflets%2Fit72.pdf&ei=9rMjUMbKAsfK0QXVj4GABQ&usg=AFQjCNFJ-BDPy7fBSPcdZ2cNVqojnRaNFw&sig2=vN_RnQZDeVrTChtXCuAQhg

Shane732

TheDuke wrote: »

actually this now makes a lot more sense now that i re-read it.... thanks again

"Tax treatment of shares acquired by employees and
directors under Unapproved Share Option Schemes"

http://www.google.ie/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&ved=0CGoQFjAD&url=http%3A%2F%2Fwww.revenue.ie%2Fen%2Ftax%2Fit%2Fleaflets%2Fit72.pdf&ei=9rMjUMbKAsfK0QXVj4GABQ&usg=AFQjCNFJ-BDPy7fBSPcdZ2cNVqojnRaNFw&sig2=vN_RnQZDeVrTChtXCuAQhg

I'd ask your employer. There are a number of different schemes out there.

Employees are generally told what to do in relation to share options and payment of taxes.