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Do I need to fill in Capital Gains section in this situation?

Do I need to fill in Capital Gains section in...

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Good morning,

My client works for a US quoted company and is given shares (RSU) as part of his salary. The tax on exercise (45% higher rate + 2% NIC ee + 13.8% NIC er) is funded by instantly selling 60.8% of his stock (cashless exercise).

As this is a disposal of shares does this need to be reported on the Capital Gains pages, although the gain is nil (same day sale)? The client doesn't have any other gains to report for the tax year.

I'd say yes but would like confirmation from other AWeb members.

Thank you.

Replies (9)

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By nogammonsinanundoubledgame
20th Jul 2015 07:53

I'd say no

I'd say probably no, because it sounds like a profit from employment related securities in an unapproved share option scheme.  So the gain is charged to Income Tax (and NIC) as opposed to Capital Gains tax, as apparently depicted in the supporting documents.

With kind regards

Clint Westwood

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By Chipette
20th Jul 2015 09:01

Thanks Clint

 I agree it has been taxed through PAYE but to pay for the tax there is also a disposal for CGT purposes. This is where I am unsure whether to report or not.

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By gbuckell
20th Jul 2015 10:58

Return needed

Potentially a CGT return is required. As no gain was made a return is only required if the sale proceeds were more than four times the annual exemption.

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By Chipette
20th Jul 2015 11:44

Thank you
As the client is already in self assessment I think he has to file the CGT return. Thanks for confirming my thoughts.

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By nogammonsinanundoubledgame
20th Jul 2015 12:08

I am missing something, obviously

To my mind, leaving aside the question of whether de mimimis exemptions apply, a CGT supplement to the tax return can only be required where there has been a gain chargeable to CGT.  Where statutory provisions dictate that a gain is chargeable to Income Tax instead, it is not also chargeable to CGT.

With kind regards

Clint Westwood

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By barbaracordner
20th Jul 2015 12:19

options

Hi Clint

 

I think it is the exercise that is chargeable to income tax.

Disposal of shares is a separate matter and is chargeable to CGT albeit same day sale will be no gain (in fact probably a tiny loss to costs of sale)

 

barbara

 

 

 

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By barbaracordner
20th Jul 2015 12:19

options

Hi Clint

 

I think it is the exercise that is chargeable to income tax.

Disposal of shares is a separate matter and is chargeable to CGT albeit same day sale will be no gain (in fact probably a tiny loss to costs of sale)

 

barbara

 

 

 

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By Portia Nina Levin
20th Jul 2015 12:48

I agree that it is reportable

By any person that is required to file a return, if the proceeds exceed 4 times the annual exemption, by virtue of TCGA 2992, section 3A. The disposal is a chargeable disposal, as defined in subsection 3, even though the amount of the gain is nil.

There would be no obligation to notify chargeability, in respect of the non-gain, but that is a different issue.

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By David Treitel
23rd Jul 2015 08:56

Prudence rules

The prudent accountant would complete the capital gains pages for the same day sale of the stock; in almost all cases there will be a small CG loss equal to the dealing costs.  This loss might be helpful against other capital gains.

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