Technology - What's your option?
Employee share options can lead to tax misery
Employee share options can lead to tax misery
Employees made redundant from a dotcom may face hefty tax bills for worthless share options if they haven’t taken professional advice.
The situation arises when employees exercise options but do not sell the stock, waiting instead for the share price to rise. According to US reports, more than 25 Microsoft staff have filed for bankruptcy as a result.
Dotcom staff left with stock that is next to worthless, have to pay tax on the value of shares at the option price, regardless of the share price on tax return day.
The problem is exacerbated by workers taking advantage of a scheme which gives them tax breaks if they buy company stock for their pension scheme.
Nicki Demby, reward partner at Andersen, said: ‘Anyone taking professional advice will be told not to exercise the options until the day they want to sell, so that their tax liability is always less than their profits.
‘We strongly advises against borrowing against future options. They are an investment opportunity, not free money,’ she added.
A recent Andersen report revealed over half the share options granted at flotation prices in the last four years are now worthless.
This story first appeared on www.vnunet.com.
The numbers you crunch tell a story. Your expertis...
23yEmbracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...
View articleOrganisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...
View articleIn a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...
View resourceDiscover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...
View articleThe amount of tax saved by businesses through HMRC’s Patent Box scheme has increased by 23% over the last five years, from £1.14 billion in 2017/18 to...
View articleUK Chancellor Jeremy Hunt has hinted at the possibility of further tax cuts in the upcoming spring Budget, during his time at the World Economic Forum...
View articleThe legislation, which introduces a global minimum tax of at least 15% for multinational enterprises, aims to limit tax competition and ensure large c...
View articleThe upcoming tax changes in 2024 will significantly impact businesses and individuals in the UK. Accountants play a crucial role in helping clients na...
View articleAccountants must stay vigilant, adapt their tax strategies to evolving regulations, prioritize transparency, and foster collaboration with tax authori...
View articleAs the government prepares for re-election, PM Sunak promises to control spending in order to bring forth tax cuts next year Read More...
View articleThe Office for National Statistics revealed that the UK economy shrank by 0.3% in March after the economy grew by 0.1% in the previous three months Re...
View articleAs the Spring Budget approaches, dissenters of the UK government’s increasingly complex contractor legislation are baying for change. HMRC has already...
View article