Tax options for exercise of employee share options

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FinanceCurious

Registered User
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Hello,

I have share options in an unapproved scheme that I expect I will have to pay 52% tax on once exercised. I’m a PAYE worker and am interested in possible options to reduce a future tax bill. I fully expect to have to employ a financial expert to assist, but any advise here would be useful to focus my research in the lead up to that. Any advice or suggestions would be appreciated.

Thanks,
Peter
 
Yes, you are correct on the 52% tax and this is due for payment within 30 days of the option exercise. You won't be able to do anything straight away to reduce your tax liability as the RTSO (Relevant tax on share options) requires immediate payment with no deductions. However if you want to reduce your tax liability afterwards you can made a pension contribution, make an EII investment and a few other things. There isn't a huge amount of things you can do but the ones mentioned are some. Each obviously comes with its own conditions.
 
Thanks Dublin67. EII is new to me so I will definitely try to understand that more. I was aware of pension contributions for the current and previous year to help reduce my tax liability. However as a standard PAYE employee this might only be a small reduction as I have a potentially sizeable gain. I assume there are company structures I can put in place that would allow options for a sizeable reduction in liability. I’m aware of the existence of SSAP but also need to research that more. You mentioned a few other things so if you did have a quick pointer to those other things I can try to look into them.

Thanks,
Peter
 
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