We're home to a fantastic community of MoneySavers but anyone can post. If you want to ask about changing your username, have login problems, have password problems or a technical issue please email forumteam moneysavingexpert. If you want to ask why a word can't be typed, your signature's been changed, or a post has been deleted see the Forum Rules. If you don't find the answer you can ask forumteam moneysavingexpert. If you have any questions please read our Forum Rules and FAQs.

If a forum post breaks our rules please click "report" on the post or email the post link to forumteam moneysavingexpert. Skimlinks adds tracking to some, primarily retailers' links, to show they come from this forum. For some retailers, instead of using Skimlinks to turn the link into a tracked link, we use affiliated links set up through other third parties.

Then if it generates revenue from that, this site is paid. The links don't change the content, or what you see or track individual data? So we hope you choose to switch it on. See the full Skimlinks factsheet for more. All the Forum's best tips go in MoneySavingExpert's weekly E-mail. Plus you'll get all the new guides, deals and loopholes. On my way to Denbigh School to talk to students and film a new free financial skills course that'll be available for the openuniversity.

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code. Your browser isn't supported.

It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. The MSE mobile menu not all pages are optimised yet. Welcome to the MSE Forums We're home to a fantastic community of MoneySavers but anyone can post.

How do I post?: Hi and welcome to MSE Forum! We hope you enjoy using it to save lots of money. Login to MSE Forum x Use your username and password to Login to MSE Forum. Join the MSE Forum x Contribute to the MoneySavingExpert. I agree to abide by the Forum Rules. Get Martin's Free Weekly Money Tips email. Keep me logged in. Login Login with Facebook. Don't have a Forum account?

Join Here Start posting on MoneySavingExpert Forum in minutes. Have a Forum account? Search Post reply Subscribe to thread. I've inherited fully vested US company stock options five years ago not approved by Inland Revenue in the UK.

Those options will expire in I'd be grateful for any advice on the tax-planning by excising those options. I found an old thread here, maybe there is something new I need to know.

There are currently no thanks for this post. I have been keeping an eye on this thread hoping to see some good advice. I like to think I know a fair bit about options and Capital Gains Tax but I am really struggling to understand your question.

Sorry, but tax really is personal, If an option was granted to someone who has since died and you have inherited the option the question of whether the option was part of an approved scheme or not is not directly relevant to you. The original grantee may, or may not have had an Income Tax liability on the grant of the option but that is nothing to do with you. If I am reading this correctly when the person died the option itself was a capital asset and passed to you at its open market value at the date of death.

Actually establishing the open market value of the option at the date of death really requires significant professional expertise. Now, if you can sell the option you will be faced with a Capital Gain based on the increase in value of the option from the date of death to the date you sell it. If you exercise the option, buy the shares or stock and then sell the shares or stock your Capital Gain will be based on the difference between the market value of the option at the date of death plus the amount paid by you in exercising the option against the net proceeds of sale.

Users saying Thanks 1. Thank you, thought no one will reply.

Capital gains tax on property - Which?

They are just the right to buy company shares at fixed price some years later. The options was vested instantly because of the death. As for your mail, am I right to think 1. The options are held in a US broker account appointed by the company. With a few glances of PAYE showing in payslips till now, can you advice on: What I am going to expect after the broker excises the options?

Am I paying the tax or the broker is paying on my behalf? How do I calculate the tax due? At the moment we are almost not talking the same language but, hopefully we will get closer. The basic principles, as I see them, are: Options are capital assets.

When the previous owner of the options died the options passed to you at their open market value. So, on the date the person died you legally acquired a capital asset, the options for their open market value on that day. Your idea that the market value of the options on the date you acquired is the difference between the share price and the option price sounds very sensible to me.

However, in my working days I would always have to refer that valuation to Shares Valuation Division. So, sorry but no guarantees from me on this. If you exercise the option, what you actually do is to transform the option into shares.

You then have to pay the option price and you end up with a new capital asset, the shares which cost you the sum of the acquisition value of the option plus the option price.

Up to now, there is absolutely no UK Income Tax or Capital Gains Tax to consider. If you then sell the shares you will realise a Capital Gain based on the difference between your acquisition cost and your disposal proceeds. In my experience all sorts of things can happen when you exercise options.

It is not uncommon for someone such as the company or, indeed the brokers, to lend you the money to enable you to exercise the option on the basis that as soon as you exercise the option you will sell the shares and repay their loan. In effect you could borrow the money for a matter of seconds at nil or minimal cost but the principles I have outlined above will apply. When it comes to tax planning there are all sorts of options that may be available to you mainly dependant on Whether you have to exercise the options in one hit or are able to exercise some of the options now, some next year etc.

Whether you need to borrow money to exercise the option. How comfortable are you with publishing figures?

Pay As You Earn applies in the UK to wages and pensions paid in the UK. I really cannot imagine how some American brokers are operating PAYE on anything. Have you got things right? The brokers are exactly that. They do not exercise options themselves. They act on your behalf. You own the options and only you can exercise them. With the basic principles you mentioned, First, I need approach the Shares Valuation Division. Is it before or after excising the options? Where can I find it and how long it takes to get the valuation?

Second, by borrowing the capital to buy the shares at option price will not attract the capital tax and income tax at this stage; the tax is only due on the net gain when I sell the shares share price less option price, broker charges, loan interest. What do you mean about publishing figures? Do you mean those money questions appeared in newspapers with advice from experts?

Thank you for your time and being patient with me, I will learn more. I wont pretend to be an expert on these matters but can add the following. I also have stock options with a US company. As stated above it is usual to exercise and sell without the need to dip in you own pocket. Normally the resultant amount is the capital gain and both US and UK tax will be payable. Yours are inherited so maybe not as clear - I can't comment on that. Also,NI and employers NI contributions are payable.

Any advice is helpful to me now. Will the NI, employer NI contributions be paid through my employer payroll? Thought only need to pay capital gain tax here after filled W-8BEN. Annie This is quite an unusual situation as every stock option plan I have seen has the stock options vest immediately when the person they were granted to dies.

This means that on the date of death, the option is automatically exercised and where unapproved are subject to income tax and national insurance, based on the following: If you sell the shares on the same day, there is no capital gains tax to pay. You will only pay capital gains tax if you hold on to the shares, and the value of the shares increases compared to the market value of the shares when they vested and were automatically exercised.

If you then sell, then you will pay capital gains tax based on: Market value on date you sell the shares - market value on date of exercise. Your opening email however suggests that the option plan in question has a clause that allows the option itself to be passed to you. If it is still an option you will need to exercise it before it lapses in As you are not an employee of the company i cannot see how practically the company can withhold any tax on the exercise of the option.

You should note that it is very unlikely there will be a US tax obligation on these, as you are I assume a UK tax resident. I would try and speak to someone in employment taxes at the US company in question, and ask them to explain how to proceed practically. Interesting contributions from stan and Londonboy. They brought up points that I had not thought of. That is one of the benefits of sites like this.

I took it at face value that you actually inherited stock options. Taking events in chronological order I assume that: The deceased, in the course of his employment, was granted an option. Because the scheme under which the option was granted was not approved by HMRC then if he exercised the option there would have been liability to Income Tax and NIC. If, as Londonboy suggests, his death automatically triggered the exercise of the option then there is liability to tax and NIC but the responsibility for paying this rests with his estate, not you personally.

If that is the case you actually inherited shares, not the options. If you are the executor or administrator of his estate then you really have to ensure that you understand that you have separate roles and responsibilities.

You, as a beneficiary, are simply entitled to what you have inherited. Just to complete the gobbledegook, if you as an executor get this wrong then you, as a beneficiary, could sue you, the executor, for negligence. Unfortunately, you cannot approach Shares Valuation Division direct.

You can only approach your own Inspector of Taxes but no-one from HMRC is going to be interested until such time that tax is at stake, normally after you have actually sold whatever capital asset you now hold. Yes, if you borrow the capital to buy the shares at option price there will be no tax charge on that. Whether you have to sell in one go is governed by the terms and conditions of the option.

But my guess is that I am asking the same thing or probably more.

There are so many variables in your situation so far that, quite frankly, it is impossible to come up with a comprehensive answer. It would just be so much less complicated if we knew whether you are the widow of the deceased, an executor, or simply a beneficiary. It could take a few years and it could be better for you personally to take a tax hit and get the net cash into your bank account earlier.

So, I think you have to decide. Tax really is personal and in your situation I think you really have to choose between opening up on here and getting professional advice. Thank you Londonboy and Jimmo for your reply. The options belonged to my late husband. The HR department transferred the options to me, together with a broker account, and W-8BEN to sign two years ago.

That charge would have arisen as the benefit was from his employment. However you are actually going to exercise the options and they did not arise from your employment. Therefore there is nothing for the UK taxman to charge. For UK Tax you really only have to worry about Capital Gains Tax and you seem to already have the basics of the calculation of the amount of the Capital Gain.

The following link is to the relevant HMRC Instruction Book. That will be covered by your annual exemption and you will pay no Capital Gains Tax. Next year you do the same thing and so on until you clear the lot. The drawback is obviously that it takes more time for you to get all the money into your hands. You really should check with the brokers about the US tax situation but remember if the US charges you Income Tax there will be no corresponding Income Tax charge in the UK so you will not be able to claim Double Taxation Relief.

If the US charges you Capital Gains Tax and you exercise all the options this year you will be able to claim Double Taxation Relief. Jimmo, thank you for spending so much time to guild me through. I would never know where to start without your help. Feel a bit braver to contact the US broker enquiring the other side of tax issues now. At the moment, I can only use the difference of option price and share price as a taxable gain. It is up to you to do your own research.

In some ways I hate to do this but when you are logged on to the board there is a Thanks button on each message and you have never, so far, clicked on it in any of the posts. Make sure you do that.

An Overview of UK Share option Schemes

Informal arrangements tend to come and go but I would suggest that some time after 5 April you contact HMRC to explain your situation. In my days a one-off issue like this could be dealt with informally but you could have to make a Return. Come back if you need to but I think your present priority is to sort out the US side. Sorry, Jimmo, didn't know what the thanks button was for. I've press all of them. Thanks and good luck. In my very limited experience of talking to US businesses as a customer they are light years ahead of anything in the UK on Customer Service so I imagine that they really will help you but I always smirk when they end with "Have a nice day.

Last edited by jimmo; at The time now is Sign up for MoneySaving Emails. FAQs Privacy policy Past emails Unsubscribe. Forum Message Forum team message goes here Message history.

Long-Term Capital Gains Tax Rates in -- The Motley Fool

Welcome to our new Forum! Our aim is to save you money quickly and easily. We hope you like it! Forum Team Contact us. Live Stats 1, Posts Today 8, Users online. Popular on MSE 1: Here's where supermarkets hide bargains 2: Reclaim PPI for free 3: MSE's Money Tips latest weekly email 4: Premium Bonds prizes cut - still worth it? Top savings accounts - up to 2. Martin's Twitter RT heresd: How this site works We think it's important you understand the strengths and limitations of the site.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.

We don't AS a general policy investigate the solvency of companies mentioned how likely they are to go bust , but there is a risk any company can struggle and it's rarely made public until it's too late see the section 75 guide for protection tips. We often link to other websites, but we can't be responsible for their content.

Always remember anyone can post on the MSE forums, so it can be very different from our opinion. More tools from MoneySavingExpert Budget Planner Free tool to analyse your finances and scrutinise spending. Premium Bonds Calc Unique tool uses probability to estimate winnings. EBay Local Deals Mapper Find cheap pick-up only items near you - they often attract fewer bids MobileValuer. It compares who pays the most. CallChecker Find the cheapest calls for any country and for calling mobiles TravelMoneyMax.

About the Site MSE's Editorial Code Site's Funding Sitemap Jobs Accessibility Email FAQs Site FAQs Forum Rules New to Forum? Martin Lewis is a registered trade mark belonging to Martin S Lewis.