I am part of an Unapproved Share Scheme. What tax do I need to pay?

Unapproved Share Schemes are fairly common in Ireland. There are two taxes you need to be aware of. First, you will need to pay Income Tax when you receive the shares and Capital Gains Tax when you ultimately sell the shares.

 

 

In your case, under an Unapproved Scheme, your employer will not have deducted any Income Tax from your pay. So, you first need to figure out the Income Tax due and pay this over to the Revenue yourself. This income tax is known as RTSO (Relevant Tax on a Share Option).

 

Assuming you may have a tax rate of 52% you will need to allow for an income tax bill of €15,600 (€30K @52%). 

 

You will also need to be aware of paying CGT on any money you make over and above the value of the shares when you got them compared to the value the day you sell.

 

When it comes to selling your shares you have to pay tax in the form of Capital Gains Tax. In Ireland this is currently charged at 33% of the gain. The first €1,270 of a gain in a tax year is exempt from CGT.

 

The basic principal here is that you need to determine what your gain was, i.e. you pay tax on the difference between the value of the shares when you received them and the value of the shares when you sell them. 

 

For example, say you go ahead and sell your shares on 20 March 2022 for €33,000 as they have increased in value. The market value of the shares when you received them was €30,000. So, you would be liable to pay 33% CGT on your gain of €3,000.

 

Gain €33,000 - €30,000 = €3000 CGT (€3,000 - €1,270)* 33% = €570.90. 

 

 

TaxAssist helps thousands of taxpayers every year figure out what they Revenue, file the relevant forms and pay their tax. We will make sure you pay the correct tax whilst ensuring all reliefs are claimed. If you would like us to handle the tax on your share options get in touch for a free consultation today.