Avoiding CGT by putting shares in isa

monkfish_3 · 11 April 2007 at 10:46AM

hi i wonder if anyone can help me.

I am in a sharesave scheme whereby money is deducted from my salary every month and after 3 yrs the total saved is given a bonus interest of around 5% and then this money is used to buy shares in my employer at a discounted rate. Basically after 3 yrs i will have put in £9000 and the shares i get would be worth today around £27K.

Now does this mean that if i sold them instantly i would be liable for 27k - cost (9k) - cgt allowance (9K i think) so 9k in capital gains tax.

Basically i've heard that i can avoid this by putting the shares into an isa can anyone elaborate

thanks in advance

RabbitMad · 11 April 2007 at 11:40AM

Yes, you will only be liable for CGT when you sell or give them away.

If you are amrried or in a civil partnership you could transfer some to your OH and then you'd have two lots of CGT allowance to use.

Alternatively sell some now and wait until the next tax year to sell the rest.

I think to put them in an ISA would mean you'd need a self select ISA and you would only be able to shift 7K's worth in a year.

cheerfulcat · 11 April 2007 at 11:48AM

Hi, monkfish,

Now does this mean that if i sold them instantly i would be liable for 27k - cost (9k) - cgt allowance (9K i think) so 9k in capital gains tax.

Not quite; it would be £9000 of gains liable to tax at 20% or 40% depending on your tax status.

Basically i've heard that i can avoid this by putting the shares into an isa can anyone elaborate

You can move the shares into an ISA without crystallising a gain under certain circumstances; have a look here.

monkfish_3 · 13 April 2007 at 12:47AM

so it looks like i can sell £18k worth instantly and put £7000 worth into a isa leaving me with just £2k that would be subject to cgt?

agal · 13 April 2007 at 3:08PM

cheerfulcat wrote: »

Hi, monkfish,

Not quite; it would be £9000 of gains liable to tax at 20% or 40% depending on your tax status.

You can move the shares into an ISA without crystallising a gain under certain circumstances; have a look here.

Surely £27k - £9k means there would be £18k of profit liable to CGT?

cheerfulcat · 13 April 2007 at 4:14PM

agal wrote: »

Surely £27k - £9k means there would be £18k of profit liable to CGT?

It's £27,000 - £18,200, actually; you take away the cost ( £9000 ) and then use the CGT exemption ( £9200 for the current tax year ). This leaves £8800 of gains liable to CGT.

Avoiding CGT by putting shares in isa

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