Tax and Employee Share Schemes

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1. Overview

Your employer may offer you company shares as a reward for working for them. These rewards are subject to tax.

Some schemes have tax advantages, which means that you will not pay Income Tax or National Insurance.

You can get tax advantages if you get shares through the following schemes:

You can also get tax advantages if you바카라 사이트™re an employee shareholder.

Non-tax advantaged share schemes

You may be offered shares outside of these schemes. However these will not have the same tax advantages. You바카라 사이트™ll need to report Income Tax and National Insurance contributions by submitting a Self Assessment tax return if your employer does not deduct these through payroll.

These schemes are called non-tax advantaged share schemes, which can be:

  • 바카라 사이트˜acquisition schemes바카라 사이트™, which give an employee free or discounted shares
  • 바카라 사이트˜share option schemes바카라 사이트™, where an employee can buy shares

Dividend income

You may get a dividend payment if you own shares in a company.

You can earn some dividend income each year without paying tax.

Find out how to work out and pay tax on dividends.

2. Share Incentive Plans (SIPs)

This gives you the option to regularly save and buy shares.

If you get shares through a Share Incentive Plan (SIP) and keep them in the plan for 5 years you will not pay Income Tax or National Insurance on their value.

You might have to pay Capital Gains Tax if you sell the shares.

You바카라 사이트™ll not pay Capital Gains Tax on shares:

  • sold, if they were kept in the plan until the point of sale
  • transferred to an Individual Savings Account (ISA) within 90 days of taking them out of the plan
  • transferred to a pension, directly from the scheme when it ends

If you do not transfer your shares to a pension immediately when the scheme ends, you can still transfer them up to 90 days later. You may have to pay Capital Gains Tax if they go up in value between when you buy them and when you transfer them.

There are 4 ways you can get shares under SIPs.

Free shares

Your employer can give you up to £3,600 of free shares in any tax year.

Partnership shares

You can buy shares out of your salary before tax deductions. There바카라 사이트™s a limit to how much you can spend - either £1,800 or 10% of your income for the tax year, whichever is lower.

Matching shares

Your employer can give you up to 2 free matching shares for each partnership share you buy.

Dividend shares

You may be able to buy more shares with the dividends you get from free, partnership or matching shares (but only if your employer바카라 사이트™s scheme allows it).

You will not pay Income Tax if you keep the dividend shares for at least 3 years.

3. Save As You Earn (SAYE)

This is a savings-related share scheme where you can buy shares with your savings for a fixed price.

You can save up to £500 a month under the scheme. At the end of your savings contract (3 or 5 years) you can use the savings to buy shares.

The tax advantages are:

  • the interest and any bonus at the end of the scheme is tax-free
  • you do not pay Income Tax or National Insurance on the difference between what you pay for the shares and what they바카라 사이트™re worth

You might have to pay Capital Gains Tax if you sell the shares.

You바카라 사이트™ll not pay Capital Gains Tax if you transfer the shares:

If you do not transfer your shares to a pension immediately when the scheme ends, you can still transfer them up to 90 days later. You may have to pay Capital Gains Tax if they go up in value between when you buy them and when you transfer them.

4. Company Share Option Plan

This gives you the option to buy up to £60,000 worth of shares from 6 April 2023 (or £30,000 if the options were granted before 6 April 2023).

If you buy shares between 3 and 10 years after being offered them, you will not pay Income Tax or National Insurance on the difference between what you pay for the shares and what they바카라 사이트™re actually worth.

You may have to pay Capital Gains Tax if you sell the shares.

5. Enterprise Management Incentives (EMIs)

A company can offer you Enterprise Management Incentives (EMIs) if it has both:

  • assets of £30 million or less
  • fewer than 250 full-time employees

This gives you share options up to the value of £250,000 in a 3-year period. You must work at least 25 hours a week or 75% of your total working time for the company.

You will not have to pay Income Tax or National Insurance if you buy the shares for at least the market value they had when you were granted the option.

If you were given a discount on the market value, you might have to pay Income Tax or National Insurance on the difference between what you pay and what the shares were worth. If you buy the shares within 10 years of being offered them, you will not pay Income Tax or National Insurance on the difference.

You may have to pay Capital Gains Tax if you sell the shares.

Excluded activities

Companies that work in 바카라 사이트˜excluded activities바카라 사이트™ are not allowed to offer EMIs. Excluded activities include:

  • banking
  • farming
  • property development
  • provision of legal services
  • ship building

6. Employee shareholder shares

To be an employee shareholder, you must own shares in your employer바카라 사이트™s company that were worth at least £2,000 when you got them.

You will not usually pay Income Tax or National Insurance on the first £2,000 worth of employee shareholder shares you get before 1 December 2016.

You will not get tax relief if you or someone you바카라 사이트™re connected with (like a business partner, spouse or family member) have 25% or more voting rights in the company.

When you become an employee shareholder your employer must pay for an independent expert to give advice about the terms and effects of the employee shareholder agreement. This advice not count as a taxable benefit.

Selling your shares

You might not pay Capital Gains Tax when you sell shares. It depends on when you signed your employee shareholder agreement.

Before 17 March 2016

You only pay Capital Gains Tax on shares that were worth over £50,000 when you got them.

From 17 March 2016

You only pay Capital Gains Tax on gains over £100,000 that you make during your lifetime. The 바카라 사이트˜gain바카라 사이트™ is the profit you make when you sell shares that have increased in value.

7. Transferring your shares to an ISA

You can transfer up to £20,000 of employee shares into a stocks and shares Individual Savings Account (ISA) if you have shares in a:

Your ISA provider must agree to the transfer.

You will not have to pay Capital Gains Tax on any gains you make on your shares if you move them to an ISA.

You must transfer your shares to your ISA within 90 days of when you took out your SIP or SAYE shares.

These shares will count towards your £20,000 ISA limit. They cannot be in addition to the limit.

Ask your employer or ISA provider for more information on how to transfer.

8. Reporting the gain on your shares

The 바카라 사이트˜gain바카라 사이트™ is the profit you make when you sell shares that have increased in value.

If your gain is above the annual exempt amount, you will need to report it to HMRC by either:

If you use the 바카라 사이트˜real time바카라 사이트™ Capital Gains Tax service, you바카라 사이트™ll need to submit a tax return as well if you need to report:

  • the sale of other shares in the same tax year
  • the sale of other chargeable assets
  • any reliefs you have claimed