Selling Share - Tax

yop

Guys + Girls

My wife recently sold shares in her old company, she received them from the company when she worked there, X amount each quarter and these shares which were given to her have matured.

She decided to cash them in and received a few grand.

Now I have searched boards and reveue.ie does not make much sense but how does one calculate how much tax she should pay.

Many thanks

kluivert

It depends under what scheme she received the shares under wil depend on the tax position.

Employee share option or the other one which is avoiding my memory right now sorry.

There is a certain relief available on the disposal but theres is a holding period of three or five years on these shares.

Id need to check that one out to give you accurate info, other i advise you to contact your local revenue office rather than the internet(bad site). Then contact a local accountant to confirm the situation. You shouldnt be charged for a five minute phone call to the accountant.

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Your will pay income tax and/or capital gains tax.

Capital gains tax will be paid on the profit made on the appreciation in share value from when your wife took ownership of the shares to the point of the sale of the shares. There is a €1000 annual exemption on CTG.

Income tax will be paid on the immediate profit your wife made when she received the shares (if any). For example if your wife got the shares at a 20% discount to market she will need to pay income tax on that 20% profit.

I'm not an accountant (thank god) so if there is serious money involved you should probably just call the Revenue or talk to a real accountant.

kluivert

PashalNee nearly has it right.

Am a trainee who took the tax exams in December you'd think it'd be fresh in the ole head. There was a change in tax law that threw but i remember it now.

This is a short hand guide:

There is two schemes - Approved and Unapproved.

Unaproved Schemes.

Income Tax - For options exercise before March/April 2003 (Early 2003, check this, am not sure exact date) income tax arising on the gain between the option and the exercise could be deffered till disposal or seven yr limit.

Finance Act 03 changed the above rule majorly from seven years to 30 days from the date of exercise. Income Tax at the higher level of 42%

Capital Gains Tax - The base cost will be the price of the shares at the date of exercise and not the options price. The proceeds will be the date of disposal. Calculate gain and take away your annual exemption of €1270.00, then taxed at 20%, when this is payable depends on the date of disposal, there is two payable dates. 31/10/** or 31/01/**

Approved Schemes - Finance Act 01

Income Tax - No IT at the date of exercise if you dont dispose of the shares within a three year period.

Capital Gains Tax - Taxed on the total gain from date of option rather than date of exercise, sales proceeds are the proceeds from the date of sale, minus the two to get gain, take away annual exemption of €1270.00 and tax at 20%.

I am a trainee accountant so please seek the guidance from the revenue or a qualified accountant. This post is a rough guide and not intended as advice.

I hope the above manages to help to clear up a few issues

Victor

kluivert wrote:

Employee share option or the other one which is avoiding my memory right now sorry.

SAYE - Save as You Earn?

kluivert

What about it?