Sharesave and CGT

snax

My partner has a sharesave scheme at work about to mature and wants to know the maximum value she can sell without incurring any Capital Gains liability.

£250/month saved over 3 years
+ £450 bonus
= £9450

this grants an option on 8823 shares @107.1pence

current market price per share is ... £2.75[ish].


thanks in advance

S.

Chrismaths

Her base cost is £1.071 per share, and you are suggesting a gain on each share of £1.679. Her CGT exemption for this year is £8800, so that means 8800/1.679= 5241 shares she can sell with no CGT charge - assuming she makes no other gains during the year.

snax

Mmmm ... thought this would puzzle me...
I thought that the total consideration for the purposes of making the calculation would be the total amount invested [capital] + this years CGT alowance.
ie ... £9450 +£8800 = £18250 ...
... then divide that by the current share price at the time of the sale ....if taken as £2.75 then that would be 6636 shares ...
S.

Chrismaths

But those 6636 shares didn't cost her £9450, they cost her £7107.15. She still has some shares left, which cost £1.071 each.

snax

Sorry - had to go out for a meeting - just back .....

Ok , I understand how you have calculated the gain and arrived at 5241 shares .... but what about the capital invested to realise the gain - can this be liquidated at the same time?
From an investment of £9450 capital, if 3436 shares are sold @ £2.75 each - a consideration of £9449 is realised .... so there is no capital gain? [dealing costs ignored] - so I'm thinking what about the £8800 allowance which equates to another 3200 shares - or am I on the wrong track?
S.

Chrismaths

Wrong track completely. Have another read of my earlier reply.

3436 shares didn't cost £9450, they cost £3679.96! She still has some shares left, which had a cost.

If you buy 1000 shares for £1,000,000, they cost you £1000 each. If you sell 500 shares, those shares that you are selling cost £500,000, not £1,000,000.

meanmachine_2

Sharesave has to be the easiest to understand investment vehicle going.

I can't quite understand how the OP doesn't understand.

There is tax to pay on any profit - should this profit exceed the CGT allowance for that year.

And, er, that's it.

Forget the original investment. You've already paid tax on that - it came from your partner's take home pay.

If you wish to cash in all the profits in one go, you will have to pay some tax.

To be honest, it's a nice problem to have. Since signing on to my scheme the shares have gone down - and are close to the 80% value that I've locked in to. I'll be lucky to scrape a bean.

snax

Ok people - thanks for the advice - just strikes me as an ar@e for t!t way to calculate it.
I'll see if there is a way to transfer some of the holding to me so I can use my CGT limit as well

meanmachine - I think it's all down to timing as to whether you end up with a + or - value on the scheme.
I don't know about yours, but at this end there is a choice to exercise the option to buy the shares a the reduced rate - or just withdraw all the money you've saved [+ any bonuses] and walk away ... I don't think you can really lose - you just might not win big!

Regards
S.

jonesMUFCforever

meanmachine wrote:

I





To be honest, it's a nice problem to have. Since signing on to my scheme the shares have gone down - and are close to the 80% value that I've locked in to. I'll be lucky to scrape a bean.

When you come to the end of the term of the savings scheme you will get the guaranteed return of your capital + interest.This is if you decide not to buy the shares.
This is why shareschemes are great you can't lose!
Just imagine what you would feel kike if you had invested your money directly into the company on the stock market.

Chrismaths

You will only be able to transfer the shares between you and your partner without creating a disposal for CGT if you are married.

And the way it is calculated is sensible - they apportion the cost of the investment to each part of the investment. Any other way would not make sense. It's only once you get into taper relief, indexation and regular investments spanning March 1998 that it gets stupid and complex...

Quiet_Life

Can you still opt to take the money by depositing it in an ISA and therefore avoiding CGT if the value is over the CGT limit? You used to be able to.