Andrew was awarded 5,000 free shares by his employer on 1 January 2018. The market value of the shares at 1 February 2018 was €10,000 (€2 per share).
Under the terms of the award, the shares cannot be disposed of for a period of five years and two months.
Andrew paid the higher rate of tax (40%) and USC at 8% in 2018.
Andrew’s tax on shares in January 2018
Description | Calculation | Amount |
Market value of shares
|
|
€10,000
|
Reduction given for 5+ years (60%)
|
€10,000 x 0.6
|
€6,000
|
Amount chargeable
|
€10,000 – €6,000
|
€4,000
|
IT (40%)
|
|
€1,600
|
USC (8%)
|
|
€320
|
PRSI (4%)
|
|
€160
|
Total taxes
|
|
€2,080
|
The restriction on the disposal of the shares is lifted on 30 March 2020.
Andrew contacts his local Revenue office to advise that the restriction has been removed.
The revised amount of IT, USC and PRSI that should have been chargeable on acquisition is applied. Andrew must account for this amount directly to Revenue.
Andrew’s revision of tax on shares
Description | Calculation | Amount |
Market value of shares
|
|
€10,000
|
Revised reduction given for 2 years (20%)
|
€10,000 x 0.2
|
€2,000
|
Amount chargeable
|
€10,000 – €2,000
|
€8,000
|
IT (40%)
|
|
€3,200
|
USC (8%)
|
|
€640
|
PRSI (4%)
|
|
€320
|
Total taxes
|
|
€4,160
|
Deduct taxes already paid
|
|
€2,080
|
Tax payable |
|
€2,080 |