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Tax on Employee Shares

Is there tax on employee shares in the example below:

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Hello

Hope you guys can help please..

A company has share capital of £244.70 with share value at £0.10 each

Shares have been divided as follows:

Person A = 2210 Ordinary Shares

Person B = 175 B Ordinary Shares

Person C = 62 C Ordinary Shares

Person C is a client that I action Self Assessments for. 

She received 62 shares at £0.10 each = £6.20.

My question is: Does she have to pay tax on the shares? Obviosuly the value is under £50 and therefoe HMRC do not consider them as needing to be taxed as 'negligebale'.

OR, is it that I should be looking at the Company shes works for value and applying the perecentage that she owns

I.e as she own 62 of 2447 shares = 2.534% of the Company should tax be payable at 2.534% of the Company's value?

The Shares were issues on 23rd March 2020 and therefore within the 19/20 tax year.

Clearly, shareholdings and tax treatment not my speciality so any guidance would be very much appreciated.

Many thanks

 

Replies (19)

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By Matrix
22nd Dec 2020 12:03

Were they founder shares?

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Replying to Matrix:
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By Metaller76
22nd Dec 2020 12:17

No, a redistribution

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Replying to Matrix:
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By Metaller76
22nd Dec 2020 13:29

many thanks

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Psycho
By Wilson Philips
22nd Dec 2020 12:07

When you say "value" do you mean actual value or nominal value?

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Replying to Wilson Philips:
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By Metaller76
22nd Dec 2020 12:18

That was all the information I was given, alas. If was 'Nominal' what are the implications?

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Replying to Metaller76:
Psycho
By Wilson Philips
22nd Dec 2020 12:24

Well, you need to go back and ask for more information. If it was 'Nominal' then it is of no relevance to the issue. You need to establish what the shares were actually worth, among other things. If, as you concede, you are out of your depth with such matters you need to refer it so someone with the appropriate skillset. And by that, I do not mean posting a query to A Web.

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Replying to Wilson Philips:
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By Metaller76
22nd Dec 2020 13:25

Thank you for the reprimand.

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Replying to Metaller76:
Psycho
By Wilson Philips
22nd Dec 2020 13:30

It wasn't intended to be a reprimand. In the best interests of your client, you really should pass this on to someone that knows what they are doing - there is a whole raft of issues that needs to be considered, with penalties for getting it wrong. You have already conceded that this is not an area that you have much experience in. There is absolutely no shame in acknowledging one's limitations and equally one should not take offence at being advised to take the appropriate course of action.

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Replying to Wilson Philips:
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By Tax Dragon
22nd Dec 2020 14:10

There's an apt Dirty Harry saying (that I have in here quoted often, but sometimes wrongly attributed to Josey Wales).

Josey Wales is a great film, IMHO.

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Replying to Tax Dragon:
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By Metaller76
22nd Dec 2020 13:47

JW is a great film.

DH overrated.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
22nd Dec 2020 13:49

It was a Dirty Harry saying, but not in the film of the same name ;¬)

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Replying to Wilson Philips:
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By Metaller76
22nd Dec 2020 13:46

Appreciate your time and your advice.
I have the company's accountant that my client works for to assist as well so just wanted a better knowledge of the situation before involving him.
I have that, now, as in the basics, and I appreciate your words, as I say.
The Q on A Web was, however, valid as it has helped with my understanding.

Thanks all.

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Replying to Metaller76:
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By Matrix
22nd Dec 2020 13:52

Ask them for the value of the shares and whether the gift was payrolled. They would have made an employment related securities submission with this information so ask for the amounts applicable to your client.

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Replying to Matrix:
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By Metaller76
22nd Dec 2020 14:06

have done exactly that - cheers.

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By paul.benny
22nd Dec 2020 12:09

Metaller76 wrote:
Obviosuly the value is under £50

Why obviously? These appear to be par values and probably don't reflect the value of the company.

Were the shares given out or did your client and the others subscribe for them? If they paid for the shares, how was the price set? Buying shares at market value is unlikely to be taxable.

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Replying to paul.benny:
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By Metaller76
22nd Dec 2020 12:20

Yes, not obviously! I meant if they were the actual share value but, as you say, Company must be worth more that £244.70 !

This is where I'm a bit lost..

The shares were gifted so no money was paid by my client/ the employee.

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By paul.benny
22nd Dec 2020 16:59

All credit to the op for coming back and engaging with the replies and even more so for honesty in acknowledging the limits of their knowledge. If only more questioners were like that.

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Replying to paul.benny:
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By Metaller76
22nd Dec 2020 17:03

Appreciate that, mate. Thank you.

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