How do i account for Stock Options as a gift from a customer?

Question

uk question.

I know how they work if you are an employee.

However, i'm a director and basically work for myself. One of my customers has paid me in full for the service i provided. I know i need to account for this in this tax year.

However, they also gave me stock options that mature in 3 years time provided i don't provide my services to thier competitors.

fair enough.

So when do i account for these stock options ?

I can't do it this years as they haven't matured so i don't know what money i've made.

I'm likely to vest them in 3 years time as the options already have a a healthy profit.

Hows that going to work as i've already accounted for the service in full.

I'm wondering if they count as a new 3 year service - the "service" being to NOT talk to thier competitors.

me ? Confused.

I guess i'll have to talk to my accountant but thought i'd ask here to see if anyone knows.

my customer is in the US but i don't think that matters....

Answer 1

your customer has gifted you a headache.

Were they given to you (individual) or your company? If your company, then Corporate Venturing Scheme rules may apply. That's the company equivalent of Enterprise Investment Scheme (NOT the means of giving shares to employees - that would be Employee Management Incentives - sorry I got myself confused).

These may be difficult to classify as "approved" options, which would allow you to put them under CVS or EIS. If you can't do that, you may have to pay tax now on the value of the shares now, then pay tax later on the uplift. All of that would be taxed as income (individual) or I guess profit (company).

Sucks. You DO need your accountant on this one.

If you CAN put them under EIS or CVS, you're sorted.