Employee Stock Purchase Plan - help & Advise

Mic2904

Hi all,

each months I am buying shares from the compnay I work for for a discounted. I find it pretty easy, because the money is taken away, straight away so it doesnt hurt. Apart from that, the Share Price is going up as well.

Now in the middle of the year, I am in a position to have saved about £1500-£1700 which could go nicely towards maybe a new car, which I thinking of, but I am not sure wether I should keep it up or sell the shares.

I know there is no def answer, but some guidance would be great. How long should I hold the shares? Should I sell at all?

Are these investments good at all?

Thanks for your help.

Markus

chris_m

Are you buying from pre-tax pay? If so, is there not a minimum period for which you must hold them to remain tax free?

Mic2904

chris_m wrote: »

Are you buying from pre-tax pay? If so, is there not a minimum period for which you must hold them to remain tax free?

Mh, I def buy them pre tax. I am not sure about the minimum period. Guess I better check that.

chris_m

Mic2904 wrote: »

Mh, I def buy them pre tax. I am not sure about the minimum period. Guess I better check that.

Definitely do - if it's like our company scheme there are three-year and five-year points.
If you withdraw shares from the scheme before three years you pay income tax and NI on the market value at the time, if between three and five years you pay income tax & NI on the lesser of the amount you paid or the market value. After five years there is no income tax nor NI tax liability.

That could make a difference to your plans/aspirations.

Mic2904

Ok,

have managed to speak to netfed the other day.
I need to renew the Tax Documents, but apart from that, I can sell shares whenever I want. There is no min term I need to keep the shares.

Not bad, I'd think.

veloo

that is very strange. you buy esops pre-tax, and there is no min term you need to keep those shares? i would double check! i think selling within 5yrs would incur a tax liability, which is why if you don't plan to stay with the company for >3-5yrs, share options are not particularly good. these are carrots offered by a company to hold their employees from leaving.

Bigsmak

I'd just like to point out that Holding shares in just one company can be one of the most risky things that people do with their money.

It's part of my job to ascertain individuals attitudes towards risk and investment. Most people say that they don't want to take much risk with their cash, then pull out from somewhere (usually an old shoebox) some document telling me that they own thousands of pounds worth of shares for a company that they used to work for.

I am not saying you should sell these or keep them, I'm just saying that if you want to keep the money 'invested' then there are a lot 'safer', relatively speaking, ways to do it.

Eggs, Baskets ...that kind of thing. Its up to you what you do with these but just be aware that the values of these shares can fall as well as rise (or even stay the same...lol). .. Ask the thousands of bank workers who were paid bonuses in the form of shares...They are Now worth nothing compared to a couple years ago.

Loughton_Monkey

Check the tax issue. Don't forget two taxes are involved. General understanding is that because you have the shares bought before taxable pay, then you are liable to income tax if you sell within a certain period.

You may have been told that there is no Capital Gains Tax on the pretext that your gain is less than £10,100.