BIM44380 - Specific deductions - employee share schemes: Providing shares under FA03/SCH23 - forfeitable shares from 1/9/2003- examples
Example 1 - Shares acquired before 16/4/2003 other than through a share option; forfeiture period less than 5 years
Facts
1/4/2003 |
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 |
|
|
|
1/4/2007 |
Risk of forfeiture expires |
|
|
Market value of shares (now unrestricted) is |
£5000 |
Employment income tax charges
2002/03 |
No income tax charge on acquisition |
|
2006/07 |
Income tax charged on |
£5000 |
Deductions given under FA03/SCH23
a.p.e 31/12/03 |
Deduction |
Nil |
a.p.e 31/12/07 |
Deduction |
£5000 |
Example 2 - Shares acquired before 16/4/2003 - forfeiture period 5 years or more
Facts
1/4/2003 |
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 |
|
|
|
1/4/2009 |
Risk of forfeiture expires |
|
|
Market value of shares (now unrestricted) is |
£5000 |
Employment income tax charges
2002/03 |
Income tax charged on |
£650 |
2008/09 |
Income tax charged on £5000 - £650 = |
£4350 |
Deductions given under FA03/SCH23
a.p.e 31/12/03 |
Deduction |
Nil |
a.p.e 31/12/09 |
Deduction |
£5000 |
