do i have to pay tax on this

lilmissclass

I know there is a capital gains tax and you can earn up to 10k(ish) free. But my rather dumb question is, is that seperate from your regular paid income.

IE - I own company shares, i already pay my tax like everyone else each fortnight etc, i earn 30k. If I sell my shares (the company will take care of this for me) can i do so and keep up to 10k myself without paying more tax, or do i have to pay the tax as overall i already earn over 10k.

I have lots of these shares and really want to know if i should sell them all in one go, or 10k worth per year.
I hope that makes sense.

pjcox2005

The capital gains allowance of £10,100 (09/10) and the income tax allowance of £6,475 (09/10) are seperate.

As such, the amount of income tax (i.e. on your wages) that you pay will not eat into the capital gains allowance. Any capital gains above the annual exemption will be taxed at 18%.

Just as a check, are the shares related to your employment (for example the company you work for) as that may impact the tax treatment of the disposal.

dzug1

It's the GAIN you make on the shares that is taxed, not their sale value. So unless you got them for nothing you won't be taxed on the lot.

lilmissclass

i got them via employee sharesave plan, after 3 years i bought up shares at 1.50, they are now 3.00 I have 24k total in this

i also have share options at various prices. 1.00 - 2.00, normally when i want money i contact a company who deals with this for us and say i want to exercise my share options - they then give me some money but take about a third for tax.
I have 12k total in this. But dont understand why i pay tax on this part

I want to buy a house, so want to take money out for a deposit so im figuring if i can have 10k a year in capital gains, then maybe I could take 10k out a year without losing a lot of it.

or am i going to get taxed on it regardless so should i just take the whole lot out?

roger_c

I think I understand what is going on here, but it is difficult to advise unless you can asertain whether the employee share scheme you are with in an approved (say EMI or CSOP), or an unapproved share scheme.

Capital gains tax may be due, but like you say if you dispose of £10,100 in the current tax year (6 April 2009 to 5 April 2010) you can't go over the capital gains tax annual exemption so that'd be the safest route. Don't think the 2010/11 capital gains tax annual exemption has been determined yet, but likely to be slightly higher than £10,100.

lilmissclass

roger thanks, if i get that information will you be able to give me advice?

Money_Grabber13579

But it's only the gain you are taxed on, so if you bought all the shares at £1.50, then it will be the difference between that and todays price that you will be taxed on.

p00hsticks

Money_Grabber13579 wrote: »

But it's only the gain you are taxed on, so if you bought all the shares at £1.50, then it will be the difference between that and todays price that you will be taxed on.

Are you sure about that in this particular scenario ? It's a long time since I had share options, but I had a feeling that in this case there might also be income tax implications if you exercised your options and/or sold the resulting shares without keeping them for a certain time period ?

Money_Grabber13579

p00hsticks wrote: »

Are you sure about that in this particular scenario ? It's a long time since I had share options, but I had a feeling that in this case there might also be income tax implications if you exercised your options and/or sold the resulting shares without keeping them for a certain time period ?

As far as I know, this is just a simple straightforward CGT calculation. There would be special rules applied if they weren't all bought on the same date or at the same price, but that doesn't seem to be the case, so I think it's just a simple gain. Anyone able to confirm this?

Money_Grabber13579

What I was really referring to was that there are different rules on how to calculate what value should be used as the base cost, if all the shares weren't bought on the same day. i.e. are you selling the shares bought at the lower price, or the higher price?

I'm not entirely sure how it works though, because we have done our personal tax module yet, but it was mentioned briefly in passing through corporation tax that both a similar (but not quite the same) rules.

p00hsticks

jimmo wrote: »

I am a bit rusty on this but I think its a bit early to make sweeping statements. I’m sure I remember a time when a “share save” scheme required 5 years of savings before shares were bought in order to be approved. The OP bought after 3 years of savings.

In the context of this thread I think it would be so much better if the OP answered roger_c in detail. Then there are probably more questions.

Agreed. they've also made mention of having 'share options' as well as saving via as "share save" scheme, which is something different. I think each come with their own specfiic tax implications.