Share Options

• How is this screen accessed

  

  

A share option is a provision where an employee is able to buy shares in the company at less than the market value of the shares. This may take different forms. Inland Revenue approved savings-related share option schemes are not normally taxable. Unapproved schemes are taxable but are rare. Therefore entries in this section should be rare.

Do not enter details of dividends from shares received through employee share schemes. These are entered under Dividends from UK Companies (boxes 10.15-17).  Details should be entered here only if the income is taxable. However, even if the income is not taxable here, a capital gain will arise upon disposal.

Enter the details of the share option on the income record

• COMPANY - enter details of the share option provider or click on the magnifying glass select from a list of the clients employers.

• Class of share - enter the class of share e.g. 10p Ordinary.

• Unquoted shares? [Y/N] - this is for information purposes only and will not affect the final taxable amount.

• Share option type - click the magnifying glass to select from the following options:

• • Approved savings-related

  • Approved discretionary

  • Unapproved

• Action - click the magnifying glass to select from the following options:

• • Exercise

  • Cancellation/Release, or

  • Grant (applies only to unapproved schemes)

  • (There is no tax to pay on the grant of approved share options)

• Dates - enter the date option granted and the date exercised this only applies when exercising an option.

• Number of shares - this field does not apply on cancellation or release of an option.

• Exercise/ option price PER SHARE - enter the amount paid for each share. This field does not apply for cancellation or release of an option.

• Amount paid for option - enter any amount paid for the option, that is, the cost of acquiring the option. This is not the same as the amount paid for the shares which is entered on the line above. This amount is not used when calculating the taxable amount on exercise of an approved savings-related option. On grant or exercise of an option enter the market value per share. On cancellation or release enter the total amount received.

• Taxable amount - IRIS computes this amount automatically. The formulae are shown below:

• Approved savings-related share options:

• • Exercise: (market value - exercise price) x number of shares.

  • Cancellation or release: Amount received - Amount paid for option.

• Approved discretionary share options:

• • Exercise: (market value - exercise price) x number of shares - amount paid for option.

  • Cancellation or release: Amount received - Amount paid for option.

• Unapproved share options:

• • Grant: (market value - exercise price) x number of shares - amount paid for option.

  • Exercise: (market value -exercise price) x number of shares - amount paid for option.

  • Cancellation or release:  Amount received - Amount paid for option.

 Where an unapproved type is exercised or any type is cancelled or released the amount may already have been included in the P60 amount from the employer. An extra pop-up window will be displayed: Included in P60 or P45 [Y/N] answer as appropriate. If tax has been deducted from a share option, check with the Inspector whether an entry may be made in box 1.11 on the  employment pages of the return. The tax paid may have to be treated as a credit on the client's account.

The Revenue help sheet HS287 covers the implications for capital gains tax purposes.