The tax when you get them

The key points

• There's no such thing as free shares. If you pay less than market value, the difference is usually taxed as income.
• If your shares come with restrictions, such as leaver terms, they're restricted securities. A section 431 election, signed with the company within 14 days, usually means paying any tax on today's value so later growth is taxed as a capital gain.
• EMI options normally have no income tax at grant or exercise, as long as the exercise price is at least the market value when they were granted.
• Unapproved options usually have no tax at grant, but income tax is due on the gain when you exercise.