BIM44370 - Specific deductions - employee share schemes: Providing shares under FA03/SCH23, a/c periods from 1 Jan 2003 - forfeitable shares - examples
Example 1 - Shares acquired on after 16/4/2003 other than through a share option; forfeiture period less than 5 years
Facts
1/4/2004 |
Employee is given 1000 shares, subject to a risk of forfeiture over the next 4 years |
|
|
Market value of shares if unrestricted |
£1000 |
|
Risk of forfeiture reduces their MV by 35% to |
£650 |
|
|
|
1/4/2008 |
Risk of forfeiture expires |
|
|
Market value of shares (now unrestricted) is |
£3000 |
Employment income tax charges
If no elections made (see BIM44365):
2003/04 |
No income tax charge on acquisition |
|
2007/08 |
Income tax charged on |
£3000 |
Deductions given under FA03/SCH23
a.p.e 31/12/04 |
Deduction |
Nil |
a.p.e 31/12/08 |
Deduction |
£3000 |
Example 2 - Shares acquired on or after 16/4/2003; forfeiture period 5 years or more
Facts
1/4/2004 |
Employee is given 1000 shares, subject to a risk of forfeiture over the next 6 years |
|
|
Market value of shares if unrestricted |
£1000 |
|
Risk of forfeiture reduces their MV by 35% to |
£650 |
|
|
|
1/4/2010 |
Risk of forfeiture expires |
|
|
Market value of shares (now unrestricted) is |
£5000 |
Employment income tax charges
If no elections made (see BIM44365):
2003/04 |
Income tax charged on |
£650 |
2009/10 |
Income tax charged on £5000 x 35% = |
£1750 |
Deductions given under FA03/SCH23
a.p.e 31/12/04 |
Deduction |
£650 |
a.p.e 31/12/10 |
Deduction |
£1750 |
