Existing share options

I have some existing share options which have vested but I have not yet exercised them? What should I do about them?

If you are moving to the UK to work for a brand new employer (not part, for example, of the same group as the non-UK company which granted you your options) and you had no UK duties with your previous employer, then it should be possible for you to exercise your old vested options when you first arrive in the UK without any UK tax implications. First, of course, you will want to consider whether it is commercially sensible to exercise the options and pay the exercise price.

If you did carry out some duties in the UK it should be possible, once you are in command of all the facts, to calculate the potential taxable gain on exercise of the option and apportion that gain as between the income that is chargeable to UK tax and the foreign income that is not chargeable to UK tax.

If you are taxable in the UK on a remittance basis any gain arising on the sale of the option shares will be subject to UK Capital Gains Tax (CGT) if remitted (and detailed analysis will be required to assess whether it is possible to avoid double taxation e.g. tax where the shares are and tax in the UK). Particular care will need to be taken in calculating your allowable base cost in the option shares in assessing the CGT charge.

In conclusion: assess the facts, do the maths, exercise the options before coming to the UK or shortly afterwards and, if you sell the option shares, do not remit the gain to the UK unless you need the proceeds and are willing to pay some UK tax or can claim relief from double taxation.

For more information or advice, please contact Elizabeth Small, Partner, or Heather Corben, Partner, both in our Tax team.

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