Share/share options - tax implications

[lfcjfc]

I have been looking at related threads on this site and information on the Revenue site over the past few days now. There seems to be some confusion between employee share purchase schemes and employee share option schemes. While an individual's tax affairs are usually unique to themselves, I think I understand the basic rules;

1. Where one holds shares and disposes of them at a profit they are liable to pay capital gains tax on the gain in value. FIFO rule applies where successive purchases of the same type of shares are made.
2. Where one holds employee stock options and exercises them at a profit vs the grant value, you are liable for income tax at the marginal rate on the profit.
3. Where one takes part in an employees share purchase scheme at discounted rates and sells the shares soon after purchase, they are liable for income tax at the marginal rate on the gain. If they own these shares for a period, point 2 above applies.

There are folks on this board who seem to have a fair depth on knowledge on this - have I got the basics right?

 

[bazermc]

Yes there is a big difference between employee share purchase schemes and share option schemes. The best thing to think of is when an employee is making a financial gain there will be a tax charge.

You are correct in 1. that will always apply.
In relation to number 2 no tax will arise if the scheme is a revenue approved scheme. i.e. open to all employees etc etc...otherwise tax will apply
3. Yes again tax will arise although it will be CGT no IT so much better possible 20% over 42%

 

[jrewing]

Is it correct that if you receive discounted shares in your company, that you should pay tax on the discounted amount as a BIK ?

I am in this case for last year, and am pretty sure that the discount was not taxed as a BIK. Should I go back to the company and ask them to square up any liability I have in this case, or is it up to myself? I am PAYE.

 

[ClubMan]

Is it correct that if you receive discounted shares in your company, that you should pay tax on the discounted amount as a BIK ?

No - this is not a BIK subject to tax and PRSI deductions at source/via payroll. But it is considered nominal income that is assessable for income tax which is self assessed/declared and paid within 30 days via a [broken link removed]. Where the amount of the gain will be less than c. €3K then you may be able to arrange for the liability to be dealt with through an adjustment to your tax credits. PRSI and/or health levy does not apply except (I think) if the amount is greater than c. €3K or €5K or something like that. Not 100% sure.

I am in this case for last year, and am pretty sure that the discount was not taxed as a BIK. Should I go back to the company and ask them to square up any liability I have in this case, or is it up to myself? I am PAYE.

This thread might be of interest to you:

Does my ESPP make me self assessed?