Share Award Plan Example
Demonstration of a share award on vesting
Mr Smith has been awarded 50,000 shares in ABC plc, which will vest after a set period. Share price on vesting is £2.50.
| Profit calculation for tax and NIC liability | £ |
|---|---|
| Current value (50,000 x £2.50) | 125,000.00 |
| Award cost (Nil cost option) | (0.00) |
| Profit on vesting | 125,000.00 |
| Sell to cover tax and NIC | |
| Tax liability on profit @ 40% | 50,000.00 |
| NIC on profit @ 1% | 1,125.00 |
| Total deductions to pay | (51,125.00) |
| Shares sold to cover liability = 20,500 (£51,250 / 2.50) | 51,250.00 |
| Net proceeds after sale and deduction of liabilities | 0.00 |
| Balance of shares received = 29,500 | |
| Sell all shares | |
| Sale proceeds from sale of 50,000 at £2.50 | 125,000.00 |
| Less | |
| Tax liability on profit @ 40% | 50,000.00 |
| NIC on profit @ 1% | 1,250.00 |
| Total Tax and NIC to pay | (51,250.00) |
| Total net proceeds | 73,750.00 |
Any further sales will also generally be liable to CGT with the base cost being the price used to calculate the income tax liability.
Please note that this example does not include, or allow for, any fees or charges.