shepherdess wrote:If my calculations are correct and we are to be given the £2000 shares at the starting price £3.30 this equals just over 606 shares which is 10% of the company. If it closes at £4.00 a share on the 15th we will only get 500. Employees were to get 100 million shares (10%) If we dont get the shares till the price has gone up, for example £4 a share that means the 500 shares we will get will only add up to 75 million which is 7.5% of total shares. Who,s getting the 2.5% of the company / 25 million shares?
Your calculations are based on flawed assumptions.
Employees are to receive 10% of the company's entire share capital, in the form of shares. The exact number that each employee will receive is hard for us amateurs to determine, because it's not a straight calculation. If all employees were to receive an equal amount of shares, regardless of whether they are full-time or part-time, the maths would be simple. But because the ConDems decided that part-timers will get a pro-rata (smaller) number of shares, much hangs on the ratio of FT to PT, in establishing the number. My guess is around 680-700 shares apiece, for FT staff.
The 10% percentage was in the prospectus, and cannot be changed.
As you know, if you were to sell your shares after only three years, tax and NI is payable. However, in order to assess how much tax is payable, HMRC needs to establish a figure at which the shares were 'acquired' (even though we were given them for free). That HMRC base level is defined as 'the closing mid-price on October 15th, 2013', which looks likely to be significantly above the 330p IPO price, possibly around the 440p mark.
I hope this clarifies things for you !
So you will only pay tax on the "profit" above what the mid price is at the time we are allocated our shares?
For example, if the shares at the point of allocation are worth £2500 and after 3 years the value is £3500, when you sell you would only be taxed on the £1000?
shepherdess wrote:If my calculations are correct and we are to be given the £2000 shares at the starting price £3.30 this equals just over 606 shares which is 10% of the company. If it closes at £4.00 a share on the 15th we will only get 500. Employees were to get 100 million shares (10%) If we dont get the shares till the price has gone up, for example £4 a share that means the 500 shares we will get will only add up to 75 million which is 7.5% of total shares. Who,s getting the 2.5% of the company / 25 million shares?
Your calculations are based on flawed assumptions.
Employees are to receive 10% of the company's entire share capital, in the form of shares. The exact number that each employee will receive is hard for us amateurs to determine, because it's not a straight calculation. If all employees were to receive an equal amount of shares, regardless of whether they are full-time or part-time, the maths would be simple. But because the ConDems decided that part-timers will get a pro-rata (smaller) number of shares, much hangs on the ratio of FT to PT, in establishing the number. My guess is around 680-700 shares apiece, for FT staff.
The 10% percentage was in the prospectus, and cannot be changed.
As you know, if you were to sell your shares after only three years, tax and NI is payable. However, in order to assess how much tax is payable, HMRC needs to establish a figure at which the shares were 'acquired' (even though we were given them for free). That HMRC base level is defined as 'the closing mid-price on October 15th, 2013', which looks likely to be significantly above the 330p IPO price, possibly around the 440p mark.
I hope this clarifies things for you !
So you will only pay tax on the "profit" above what the mid price is at the time we are allocated our shares?
For example, if the shares at the point of allocation are worth £2500 and after 3 years the value is £3500, when you sell you would only be taxed on the £1000?
No - it's treated as income (so subject to income tax and NI) rather than capital gains (subject to capital gains tax). This means you pay tax on the full value rather than on how much that value has increased
To work out the full value: after three years, the shares are taxed at the lower of the price on the date you acquired them or the price on the date you sold them. After five years, the shares aren't taxed at all