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US Stock options

US Stock options

Client has just come into the office and handed over US stock options that he has exercised in tax year 2012. Made redundant from Company in 2010/2011.

He has exericed the option and made a gain of circa $ 80 000, but he has paperwork suggesting that Federal US withholding tax had been deducted

Does he still pay UK tax/does this go in his tax return?


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29th Jan 2013 13:00

Too many variables to answer this question

You probably need to obtain professional guidance on the treatment of these as there are probably too many variables for somebody to give an answer. You will probably need to provide the following data and more

1) What is clients residency status?

2) Were the options approved/unapproved?

3) When were the options granted? When did they vest? When were they exercised?

4) Where has he worked over the period that he has owned the options?

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By murphy1
29th Jan 2013 15:39



He is and was UK resident.

Options are in US company and not approved

Options were granted over the years 2003 - 2009 and were exercised Jul and Sep 2011

Worked in UK all the years


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31st Jan 2013 11:41

Expected position

This isn't exactly my area of expertise however my view is as follows

1) The exercise of the options gives rise to taxable income in the UK. The income taxable would be the 'gain' of $80,000.

2) In addition as the client worked in the UK throught the period that the options were earned, all the income fully taxable in the UK.

3) The employer (or ex-employer) should have operated PAYE on this income. As your client is no longer employed by them, this would be at the basic rate - 20%

4) Your client should have received documentation for (3) above like payslips and possibly a P60 for 2011/12

5) I'm not sure why Federal Taxes have been withheld/paid. Probably need to query the company/ask a US tax specialist. Would expect this to be refunded in due course as seems incorrect; maybe by filing a US tax return if required.(US taxes not my area)

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