Employment related shares

Unapproved share schemes: restricted shares and forfeited shares

Restricted shares

Your employer may place a restriction on when you can dispose of your shares. You are deemed to have disposed of your shares if you:

  • sell them
  • transfer or pledge them to someone else
  • use them as a guarantee for a loan.

These shares are known as 'restricted shares'.

You might be entitled to a reduction in the amount of Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSII) you have to pay. The amount of the reduction will depend on the length of the restriction.

You must pay the reduced tax due on the date the shares are awarded.  All deductions will be made through the Pay as You Earn (PAYE) system.

Forfeitable shares

Your employer may award you shares that are subject to forfeiture. For example, if you leave the company or fail to meet expected performance conditions.

You must pay IT, USC and PRSI on either the:

  • market value of any free shares awarded
  • value of discounted shares.

You will be charged tax on the date the shares are awarded even though they may be forfeited. All deductions will be made through the PAYE system.

Forfeiture of the shares

If the shares are forfeited, any tax charged when they were granted will be reduced to nil. We will repay you any tax you overpaid. You must submit a written claim for repayment to your Revenue office. You must do this within four years from the end of the tax year in which the shares are forfeited.

Next: Unapproved share schemes: convertible securities and Restricted Stock Units