Windfall advice...

spacman

Several years ago I started working in a start up business and received some shares which I paid a nominal amount for in the early days of the business.

The company is about to buy back these shares (as agreed at the time of purchase) and due to the success of the company it is estimated these shares will be worth around £100,000.

Naturally I will seek finacial advise but I was wondering if anyone could give any finger-in-the air estimate on how much tax I would have to pay and any pointers into paying as little as possible...Ideally I would like to pay off as much of my mortgage as possible but if there is more tax efficieint way of investing then that would be great!

Marco12452

I suppose the question would be 'is the sale compulsory' ? If so you will have the tax allowance of £10,100, plus no charge for the amount you paid for them. the rest would be subject to Capital Gains Tax.
If you dont have to sell them all you can sell the £10,100 worth (plus original cost) and place £10,200 worth in a shares ISA, if you have not already used any ISA allocation this year. That would mean keeping nearly £80,000 worth until April when you can sell another £10,100 and put another £10,200 into the ISA. Would take 5 tax years to complete the lot, but would avoid any tax altogether. The shares in the ISA could be cashed tax free once they have passed the qualifying period.
I fear the former is the case though from your posting information ?

joerugby

You might try to split the transaction pre and post April 5 then you get 2 x £10,100 allowances. You might also be able to transfer half the shares to your wife/husband (if you have one) prior to sale, then he/she also gets 2 x £10,100 allowances.

The above actions might also help some of the remaining gain to be taxed at basic rate depending on your other income during these years.

joerugby

Marco12452 wrote: »

I suppose the question would be 'is the sale compulsory' ? If so you will have the tax allowance of £10,100, plus no charge for the amount you paid for them. the rest would be subject to Capital Gains Tax.
If you dont have to sell them all you can sell the £10,100 worth (plus original cost) and place £10,200 worth in a shares ISA, if you have not already used any ISA allocation this year. That would mean keeping nearly £80,000 worth until April when you can sell another £10,100 and put another £10,200 into the ISA. Would take 5 tax years to complete the lot, but would avoid any tax altogether. The shares in the ISA could be cashed tax free once they have passed the qualifying period.
I fear the former is the case though from your posting information ?

Be careful as i don't think you can put unlisted (or aim-listed) shares in an ISA.

Also I would think that transferring the shares into an ISA if this were possible (bed and ISA) would crystallise the gain.