Sharesave Scheme and Tax

gadgetmind

You don't mention the value or gain in the sharesave. Is it less than your ISA allowance of £11280 for next year?

If not, then you can delay SAYE exercise (more schemes allow this) so that you exercise within 90 days of the start of the 2013/14 tax year and so get two "bites" of the allowance. You also have your CGT allowances, so there is no reason at all to pay tax, but it might take some planning.

You don't mention your age, what other investments you have, nor when you might want to draw on this ISA money. Is it a house deposit, long-term savings, or something you see as being a pension? What assets you use will change drastically based on the answer to these questions, and also on how you think you'd react if the value of your ISA dropped by (for instance) 50% in just a few weeks.

There are loads of good options but you need to identify what's best for your own circumstances.

gadgetmind

Ah, I just spotted this is page two and I've ended up repeating myself a bit. Sorry!

The_Realist

Hi,

I am 27
Have a own without about 15% equity
Total returns likely to be about my annual gross salary so v.significant.

Plan is currently:
Cash in £9200 that I contributed
Cash in c£11000 CGT allowace
Transfer c£11000 to S&S ISA then immediately cash in
Remaining 5-10k worth of shares leave in the ISA until 2013 then withdraw free of CGT.

Anyone see any problems with that plan?

gadgetmind

The_Realist wrote: »

Have a own without about 15% equity

I'm not sure what this means.

Cash in c£11000 CGT allowace

Sorry, it's frozen at £10,600. But you get this on or before April 5th and same after.

Transfer c£11000 to S&S ISA then immediately cash in

£11280, but your choice when the diversify. Again, you can do this before April 5th and after as long as within 90 days of exercise.

Remaining 5-10k worth of shares leave in the ISA until 2013 then withdraw free of CGT.

No spouse?

Anyone see any problems with that plan?

Other than you being a bit off with the numbers, no.

The_Realist

Thanks for the response, in answer:

I meant 15% equity in home bought a year ago

Spouse is also in the scheme (maybe I'm just being greedy here).

I guess my only other thought is I can't claim £9200 because I won't sell all the shares (it will only be 9200* proportion of shares old that I can claim on).

If I have 10000 shares at £4 that I have option at £0.92 for arguments sake:

How can I best split this, just to check you agree with my numbers?

Many thanks

gadgetmind

The_Realist wrote: »

If I have 10000 shares at £4 that I have option at £0.92 for arguments sake:

How can I best split this, just to check you agree with my numbers?

Those shares are worth £40k, and £10680 can "ISA up" this tax year and £11280 next tax year. (Timing is critical because of the 90 day rule, so work out when to exercise *very* carefully.)

Assuming you exercise and ISA next tax year, £11280 can go into ISA, which is 2820 shares (11280/4), leaving you with 7180 shares.

Each share has £3.08 of gain in it (4-0.92), so that's £22114.40 of gain. You can realise £10600 of gain next tax year, so you can sell 3441 shares (10600/3.08). Rinse and repeat the CGT calculation in the next tax year.

If you have exercised these shares recently, you could do your ISA and CGT allowance now and then repeat on April 6th.

Please check everything I have said!

atush

What are you going to do with all that money?

if you don't have something to spend it on, I would leave the money in the ISA until you do. you can sell the shares and invest it in something else if you like.

The_Realist

Thanks all,

Rough Plan as follows:

• Update a couple of rooms in house - new bathroom, kitchen
• Few other house 'luxuries' - new bed, etc.
• Have a v.basic car so might spend about 7k on something second hand that's a bit better
• Get more equity in the house so when the renewal comes up we can get a better rate. Maybe try and get another 25%.
• A few holidays
• Leave some in savings

The_Realist

gadgetmind wrote: »

Those shares are worth £40k, and £10680 can "ISA up" this tax year and £11280 next tax year. (Timing is critical because of the 90 day rule, so work out when to exercise *very* carefully.)

Assuming you exercise and ISA next tax year, £11280 can go into ISA, which is 2820 shares (11280/4), leaving you with 7180 shares.

Each share has £3.08 of gain in it (4-0.92), so that's £22114.40 of gain. You can realise £10600 of gain next tax year, so you can sell 3441 shares (10600/3.08). Rinse and repeat the CGT calculation in the next tax year.

If you have exercised these shares recently, you could do your ISA and CGT allowance now and then repeat on April 6th.

Please check everything I have said!

Thanks, that's how I was working it out. Likely to be able to sell the remainder in the following tax year free of CGT (or only a tiny amount).

Not able to sell until Mid June.

gadgetmind

The_Realist wrote: »

Leave some in savings

It's better that this is the ISA, but you can only move your SAYE shares into a S&S ISA, and these can't then be moved directly to cash ISAs. You options are either to invest within the S&S ISA or to take the cash out and stick it elsewhere, but cash ISA won't be an option for yet another tax year.

You might care to sign up to say you're interested in NS&I index linked bonds as there might be another issue of these during the summer. They'll send you the odd update email (one every couple of months?) but the only you really want is regards a new issue.