CH30 - Non-Tax Advantaged Share Option Schemes

Question 1

Non-Tax Advantaged Share Option Schemes

There is always an income tax charge on ?

Answer 1

exercise.

Market value at exercise - amount paid for shares = amount charged to income tax.
Amounts charged are subject to NICs if the shares are readily convertible assets.

Question 2

Non-Tax Advantaged Share Option Schemes

A capital gain will arise if the shares are sold for ?

Answer 2

proceeds in excess of the market value of the shares at exercise.

Sale proceeds - amount paid for shares - amount charged to income tax on exercise = gain
As a short cut, the gain is equal to sale proceeds less market value at exercise.