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KRA Share Options Advice


Successive governments have recognised the benefits to the economy of motivating employees by offering tax incentives for them to hold shares in their employer company. This has lead to increases in the use of share options, as part of the standard remuneration package for key employees.

The taxation of these transactions, upon the options being granted, exercised, and upon the eventual share sale, can be complicated. Depending upon the precise circumstances, the taxpayer will need to consider his/her liability to:

  • PAYE Income Tax,
  • National Insurance Contributions,
  • Capital Gains Tax.

Many of the individuals who hold such options are globally mobile. This can lead to further tax considerations involving overseas tax. Some taxpayers, who have previously not been required to complete a self assessment tax return, will need to consider their legal obligations to now disclose these share option transactions to HMRC.

Disclosing and then agreeing your share option tax liability with HMRC is principally achieved by completing and filing of various pages of a self assessment tax return.