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Consideration in shares for consultancy services

One off transaction, misc. receipts and trading allowance?

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Good afternoon

I would be grateful for any help or comments on my reasoning.

One of my client has received a one-off payment arising from the sale of shares, which were given as consideration for services.

The agreement stated that my client would be granted stock-options vesting over the period of the consultancy services. The company was subsequently bought and at this stage the client was paid and the consultancy stopped. Am I right in thinking the receipt would be treated as income? Furthermore, as the individual is otherwise employed by a different company and the consultancy service was a one-off, I believe this would this be treated as miscelleaneous receipt, rather than trade income, against which the Trading and Misc. Income allowance of £1,000 would be available. The sum received amounts to roughly £2,500.

Thank you 

Replies (3)

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By Accountant A
31st Oct 2019 21:06

I'm not clear what happened but if your client did £X worth of consultancy services then he would/should have reported £X worth of trading income whether he was paid in cash or shares (as your title says) or stock options (as the detail says).

Any gain on the options would presumably be a capital gain.

I can't believe anyone has gone to all that trouble to pay a consultant £2,500!

Thanks (1)
Replying to Accountant A:
By Wilson Philips
31st Oct 2019 21:39

I agree in principle but the consideration is not the value of the services provided but the value of the shares/options received (although one would hope that the value was at least that of the services provided).

Thanks (1)
By Chipette
01st Nov 2019 09:43

Many thanks both. I have no detail of the value of the stock-options at the time they vested and considering the amount involved I am happy to treat all of it as income.

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