ESPP

Techhead1

Registered User
Messages
19
Do I need to file a form 11 for income from gain on an employee stock purchase program?

I’m a paye employee
 

elcato

Moderator
Messages
3,165
If the annual gain is more than 5k then yes. If less than 5k use a form 12 which is available through PAYE anytime. Note: you will need to register for ROS to fill in a form 11.
UPDATE: Actually I believe payroll now stop the tax at source so there is no need as it appears on your payslip.
 

losttheplot

Frequent Poster
Messages
299
Don't think my payroll department have heard that yet. Could this expose employees who had never declared tax on these? Although ours is treated like share options and we pay RTSO (well some of us do).
 
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Coldwarrior

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148

losttheplot

Frequent Poster
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299
I think the way ours is implemented it would be difficult to tax through payroll. We don't know the gain until the end of the 6 month cycle, then the tax could be a large chunk of your pay.
 

Coldwarrior

Frequent Poster
Messages
148
Tha
I think the way ours is implemented it would be difficult to tax through payroll. We don't know the gain until the end of the 6 month cycle, then the tax could be a large chunk of your pay.
That's the way it should work, a large chunk of tax every 6 months, meaning lower net pay that month (unless you also sell the shares)
 

dublin67

Frequent Poster
Messages
235
In some circumstances an ESPP can be taxed as a share option. Ask your payroll department if they will be returning it as a share option as there is a specific employer return for this. If it is being returned as a share option then you'll need to pay tax through the RTSO within 30 days and file a Form 11 for the relevant year. Watch the timing on the tax payment as the interest rate is the daily equivalent of 11.75% per year. The Revenue do impose this in practice and it is a shocking rate. Far higher than for any other taxes.
 

Coldwarrior

Frequent Poster
Messages
148
In some circumstances an ESPP can be taxed as a share option. Ask your payroll department if they will be returning it as a share option as there is a specific employer return for this. If it is being returned as a share option then you'll need to pay tax through the RTSO within 30 days and file a Form 11 for the relevant year. Watch the timing on the tax payment as the interest rate is the daily equivalent of 11.75% per year. The Revenue do impose this in practice and it is a shocking rate. Far higher than for any other taxes.
Thanks for the info, suspect that's what's happening in my company. Is there a reason it'd be done this way vs being handled through PAYE?
 

MugsGame

Frequent Poser
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2,482
I've an unapproved stock grant vesting soon. I'm told my tax liability will be handled through payroll.

Before I approach HR for more details, how is this usuallly handled where the tax due is more than my net salary for the month? I'd hope they can spread it out equally over the rest of the year.

I don't think I have the option to pay it (directly) out of the disposal proceeds, as disposal is not automatic.
 

Coldwarrior

Frequent Poster
Messages
148
Is it a grant of RSUs or an ESPP? With the former you usually have the option of having stock units withheld in lieu of the tax, which is then reflected on that months payslip but has no affect on net pay. This may not make sense though if you aren't selling the stock soon after you get it, for example if you believe it'll rise in price etc.
 

dublin67

Frequent Poster
Messages
235
If it's done through payroll then there should not be any other tax issues on getting the shares. Obviously CGT needs to be considered on disposal and that can be done on a Form 12 (or perhaps a CG1). Only comment on CGT is watch the payment dates.

Some ESPPs, depending on how the documentation is drafted, are treated as an option and the employer doesn't withhold tax. I never really worked out why options are treated differently to almost every type of share award. It is that way because it is that way.
 
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