Tax 2008/09
Completing the Self-Assessment Tax Return 2008/09
Introduction
For all past and present Thales employees who have participated in the one or more of the five share schemes that have been launched by the company, the following notes have been produced to assist you to complete your self-assessment Tax Returns for the tax year 2008/09. The schemes addressed were launched in 1998, 2000, 2002, 2004 and 2008, and there is a section for each of these below.
These notes do not in any way constitute financial advice, but they are intended to be constructive and helpful to staff. You use this information at your own risk. No specific information is provided for staff who have been offered share option schemes.
This advice is only intended for individuals who normally reside in the
If you are in any doubt with regards the completion of the tax form, please consult your financial advisor.
Additional information can be found on the HM Revenue and Customs web site. You may need to request the foreign pages of the self-assessment tax return by contacting the HM Revenue and Customs order line on 0845 9000 404, or downloading from the HMRC website.
You may incur tax at three stages during the life of the schemes:
1. At the commencement of the scheme
2. During the lifetime of the schemes, as a result of the receipt of any dividend
3. Upon sale of your shares
Commencement: Any tax due at commencement would normally be paid via PAYE, and so these notes do not discuss this topic. You can refer to the tax presentation in the Library of schemes if you want further information.
There is a “wrinkle” in that the 2008 scheme provides staff with the opportunity to take a “company loan” to purchase the shares, and this should be declared in your self-assessment form
During the Lifetime: Your tax declaration needs to clarify to HMRC both the income you received on your dividends, and how much tax was removed at source as French “Withholding Tax”.
In June 2008, you received a gross dividend of €1.0 (irrespective of scheme) which translates to a sterling dividend depending upon the date of the bank transaction relating to each specific scheme. French withholding tax is removed at source for some of the schemes.
Note that there are different ways of completing the tax form depending on personal circumstances and these notes represent an approach which has been obtained following guidance from the information provided to assist in completing a self-assessment form. If you are in any doubt, we recommend that you discuss your concerns with a technical advisor at a tax office.
Note that a new-style Tax return was introduced for the Self-Assessment Tax Return 2007/08 which has made some changes with regards the completion of foreign income.
Upon
1998/2000 Scheme
Dividends: Complete Page F2 & F3 of the “Foreign” pages of the tax return (SA106 2009) as follows:
1. Column A (Country Code): FRA
2. Column B (Gross Dividend): Number of shares held * 0.7882
3. Column C (French tax credit): Number of shares held * 0.19455
4. Column D (Special Withholding Tax): nil
5. Column E (Foreign Tax Credit Relief): Put an "X" in the box to claim tax relief
6. Column F (Taxable Amount): Number of shares held * 0.7882
If you complete the return after the 31 October 2009 then you will also need to complete the calculation of the foreign tax credit which involves completing help sheet 263. This is complicated and will depend on your individual level of income.
2002 scheme
Dividends: Before maturity of the scheme the “Leveraged Dividend” was paid to the administrators (and not you) and so no tax on dividends in that compartment of the FCPE was applicable to employees. This scheme has now matured and so all dividends under the 2002 scheme attract tax. Please follow the following guidelines.
Complete Page F2 & F3 of the “Foreign” pages of the tax return (SA106 2009) as follows:
1. Column A (Country Code): FRA
2. Column B (Gross Dividend): Number of shares held * 0.7909
3. Column C (French tax credit): nil
4. Column D (Special Withholding Tax): nil
5. Column E (Foreign Tax Credit Relief): No entry required
6. Column F (Taxable Amount): Number of shares held * 0.7909
As you do not need to claim the foreign tax credit then there is no need to complete the foreign tax calculation section. In addition, if your dividends from all overseas shares are below £300 you can instead include the net dividends received on page three of the tax return
2004 Scheme
Dividends: If you are still employed by Thales, then any dividends obtained under this scheme are tax free.
2008 Scheme
Loan: If you opted to pay for the shares over twelve months and if the value of the shares subscribed exceeded £5,000 there may be a “beneficial loan” that needs to be reported on the employment pages of the return.
If there is a benefit it should have been reported on your form P11D. The benefit should be included in
Dividends: Complete Page F2 & F3 of the “Foreign” pages of the tax return (SA106 2009) as follows:
1. Column A (Country Code): FRA
2. Column B (Gross Dividend): Number of shares held * 0.7909
3. Column C (French tax credit): nil
4. Column D (Special Withholding Tax): nil
5. Column E (Foreign Tax Credit Relief): No entry required
6. Column F (Taxable Amount): Number of shares held * 0.7909
As you do not need to claim the foreign tax credit then there is no need to complete the foreign tax calculation section. In addition, if your dividends from all overseas shares are below £300 you can instead include the net dividends received on page three of the tax return
Capital Gains
Taper relief has been abolished and a flat rate of Capital Gains Tax (CGT) of 18% has been introduced. Further, there has been a change to the pooling basis of share identification when an individual acquires shares in a company at different times. Under the new pooling system, subject to certain exceptions, the costs of the shares will be pooled together to calculate an average figure for base cost rather than the old “last in, first out” rules.
If you did not dispose of any shares or other assets during the tax year 2008/2009 then there is nothing to complete.
If you have disposed of some shares or other assets during the tax year, then note that any resultant capital gains are subject to exemption on the first £9,600 (the ‘Annual Exempt Amount’) in tax year 08/09. If your gains are below this threshold you do not need to declare them.
CGT is a personal matter and any advice has to be tailored to individual circumstances - any further advice should be obtained from a financial adviser.
For more information on CGT, refer to the HMRC website. Help sheet 287 specifically addresses CGT under employee share schemes.
