Most employees have not declared tax on employer shares
74% of employees who hold shares through their employer have not declared the tax they owe, according to a new survey by Taxback.com.
The survey asked over 1,500 people from the Taxback.com database whether or not they have received shares in the past or present from their employer – of those who had, just 26% have paid tax on these shares.
When asked if they understand the BIK (benefit-in-kind) and CGT (capital gains tax) liabilities they might be required to pay, 72% said they “haven’t a clue”.
“Employee share schemes are a popular feature in many Irish companies, helping to reward and retain employees,” explained Marian Ryan, Consumer Tax Manager at Taxback.com.
“But it seems most employees involved in these schemes are completely in the dark as to what these benefits mean from a tax perspective,” she added.
Ms Ryan said this points to an information or communication gap between employers and workers around tax and tax responsibilities.
“For employees with shares or share options, it’s important to realise that where an employer gifts shares to an employee, these shares are treated as BIK. And as is the case with all BIK, income tax is applicable.
“Where shares are exercised or disposed of and a gain is made, capital gains tax (CGT) of 33% on that income may be due. Income tax, USC, and PRSI may also be applicable,” said Ms Ryan.