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?
Replies (3)
Please login or register to join the discussion.
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?
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)