Exercising options: Expats beware!

HMRC are set to make a small but important change to the taxation of share options awarded to internationally mobile employees with effect from 6 April 2015.

If you will not hold any share options at 6 April 2015, or you have never been awarded share options whilst non-UK tax resident, then you will not be affected and you need not read any further.

However, if you have been granted options under an employer share option plan while non-UK tax resident, then you should pay attention to a forthcoming change in this regard. At present, exercising options awarded while non-UK tax resident is unlikely to give rise to a UK tax charge, even if they are exercised whilst UK resident. This is the result of a specific piece of legislation which typically makes option gains non-taxable in this situation.

However, this will change with effect from 6 April 2015 under new legislation put forward in Finance Bill 2014. A UK income charge of some sort is then likely to apply on exercise of these options.

Exercising options which may be affected by the charge before 6 April 2015 could therefore be favourable from a UK tax perspective, and we would be happy to review your circumstances with this in mind.

If you are in possession of options granted whilst non-UK resident, please contact us to discuss what action (if any) might be appropriate.