Share this content

Exercised share options count as earnings?

Can I pay money 'earned' from share options into my SIPP and make use of previous pension allowance?

Didn't find your answer?

Dear Accountingweb members,

I’m maxing out my SIPP/pension contributions for this tax year to make use of my annual allowance from previous years.

I believe that in order to make use of the previous 3 years allowance, I must earn at least the amount I wish to contribute in total this tax year.

I want to put £100k into a SIPP but my salary is £62k. In May last year, the company I work for was sold and I was given £60k from share options that were exercised. 

My question is, were my earnings for this tax year £142k (£62 salary + £60k exercised share options)? Therefore I can contribute £100k for this tax year to my SIPP to make use of previous allowances and claim tax relief? 

Any advice most appreciated. 

Replies (3)

Please login or register to join the discussion.

avatar
By WhichTyler
17th Feb 2020 09:25

Congratulations on such a successful year, but it is probably risky to rely on strangers off the interweb for advice at this level.

Have you asked the accountant who did your company accounts or advised you on the sale, as they will have all the relevant information?

Thanks (0)
Replying to WhichTyler:
avatar
By AccountsFIRE
17th Feb 2020 17:56

Thanks for your response WhichTyler.

Good point, but the accountants that oversaw the sale have done their job and finished the work as far as I understand.

I have taken advice from our works pension company and it seems as though I won't pay income tax on the shares, more likely pay capital gains in a self-assessment, meaning I can't count the shares as income.

Unless anyone has any other thoughts it seems I've lost my unused allowance, so am obviously disappointed.

Thanks (0)
Replying to AccountsFIRE:
avatar
By WhichTyler
17th Feb 2020 22:26

AccountsFIRE wrote:

Good point, but the accountants that oversaw the sale have done their job and finished the work as far as I understand.

You never know, they might be prepared to do a little more work in return for a fee that may be small compared to the tax. But if you are happy to take tax advice from the works pension provider, then be my guest...

Thanks (0)
Share this content