Not a thrilling subject I know...
Last time the lot I work for got taken over, we were given some restricted stock which we could choose to cash in when it eventually vested. That was nice, although of course we had to pay tax on it, and as a 'high' earner that was 42% for me - 40% PAYE + 2% employee's NIC.
Then we got taken over again recently (not Intel BTW, that's next week :), and there's just been another vesting of the stock. We were still able to sell it, but this time we're being taxed at 55.8%. This is the 42% as before, but with the addition of 13.8% employer's rate.
We thought that the employer should pay the employer's rate, but apparently there's a clause in the new company's share scheme:
“The Recipient shall be solely responsible for tax obligations including UK PAYE and National Insurance contributions (including UK Employer National Insurance contributions liability) that arise as a result of the holding, vesting or sale of the Restricted Shares.”
I suppose the answer to the question 'can they do this' is going to be 'yes', but it would be nice to hear it confirmed by one of the legal types on here.
And bear in mind that I am completely hopeless when it comes to understanding financial stuff, so please keep any explanations as simple as possible :)
TIA
Last edited by: Focusless on Fri 7 Feb 14 at 12:23
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I'm not an expert, but like you I expect that if that's what you agreed to as part of the award of the options then that's what you'll have to pay. Though I've never experienced a scheme that made me liable for the employers NI and would be pretty miffed if they tried to do so!
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Yes, you're probably right, and yes, we are miffed; didn't get any say in the matter. But at least we're getting something - I don't think the stock had to transfer from the old company to the new one, although we will be losing the final vest, which isn't due until after the next take-over completes.
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The link below seems to confirm that this is allowable
www.postlethwaiteco.com/resources/guide-unapproved-non-approved-share-options-and-long-term-incentive-plans-ltips
But not compulsory. So if your scheme explicitly says that's what'll happen, then I think you're unfortunately stuffed - please excuse the complex tax jargon :-)
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Thanks Peter - for the the link, and for using language I can understand :)
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Not much you can do about the NI perhaps, but you could consider putting the gross amount left into pension to avoid the income tax, subject the the annual/lifetime limits.
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Well it's 'only' about $500 and we could do with the cash; got a Colt gearbox repair to pay for.
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Sorry. I was hoping you were seriously in the money!
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Likewise - I feared that you might end up in that horrible no-mans land where personal allowance is removed, and be facing a marginal tax rate of 76% !!
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>> Sorry. I was hoping you were seriously in the money!
Not likely! However things are looking up, possibly - I've got everything crossed at the moment hoping that the recent take-over goes ahead. It was all supposed to be done and dusted today but has been postponed a week. If it does, I'll be offered a company car - never had one before, and never expected to get one either. Quite excited; don't know the details apart from what the allowance is if I don't take the car (which might turn out to be the best option)...
Last edited by: Focusless on Fri 7 Feb 14 at 15:46
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If it does, I'll be offered a company car - never had one before, and never expected to get one either. Quite excited; don't know the details...
Who cares? Start the thread anyway. We’re bored.
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>> Who cares? Start the thread anyway. We’re bored.
ok...
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Ah g'waan, g'waan, g'waan, g'waan, g'waan.
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>>apart from what the allowance is if I don't take the car (which might turn out to be the best option)...
If you're not in the habit of running brand new cars, the allowance will be the better result, financially.
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>> If you're not in the habit of running brand new cars, the allowance will be
>> the better result, financially.
Thanks Mapmaker - I think I know that; just trying to make the man-maths add up :)
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Restricted stock awards - 56% tax :( - PeterS
