I've recently joined a company that offers a ESPP scheme and I just wanted to get a few bits of information as well as confirm that my understanding is correct.
- You choose a percentage that will be withheld from your payslip each month, say 5%.
- This accumulates over a certain period and at the end of that the money is used to purchase shares at a discounted rate, 15% cheaper than the market rate.
- You then have a few choices: sell the shares straight away and enjoy a guaranteed profit but have high income tax imposed. OR wait until the disposition becomes qualified and then only pay capital gains tax.
Is this correct?
Additionally, how long must you wait from the share purchase date until the stock disposition is qualified?
NB: If the company is trading on NASDAQ which is US, how does this affect things as I live in the UK?