share save scheme

samlee0211

good evening

i am currently coming to the end of a 3 year sharesave scheme with work, i paid in £250 a month which equates to £9000 over the three years. selling the shares now would leave me with £28000. as this is going to be a deposit for my first house i need it out in one lump sum. my question is basically how much tax will i pay?

excluding the £10,000 tax free allowance leaves me £18000
£9000 has been paid in over 3 years so is not a gain?
that leaves £9000. will i be taxed 18% on the £9000 being £1620 leaving me with a total of £26380

is this correct or am i wrong?

many thanks

ceh209

Is the scheme a 'Save as you Earn' scheme?

If you don't know, clues as to whether it is will be: were you told you could contribute a max of £250 a month? Were shares 'bought' straight away with the money you contributed?

If it is SAYE, then yes your gain will be 28k less the 9k cost.

The current annual exemption is 10600, leaving you with a gain of 8400. Capital gains tax is currently 18 or 28% depending on your income (are you normally a 20 or 40% income tax payer?)

Credit-Crunched

ceh209 wrote: »

Is the scheme a 'Save as you Earn' scheme?

If you don't know, clues as to whether it is will be: were you told you could contribute a max of £250 a month? Were shares 'bought' straight away with the money you contributed?

If it is SAYE, then yes your gain will be 28k less the 9k cost.

The current annual exemption is 10600, leaving you with a gain of 8400. Capital gains tax is currently 18 or 28% depending on your income (are you normally a 20 or 40% income tax payer?)

If this is a standard share save scheme, it sounds like one capped at 250, then you have 90 days to transfer your shares into a stocks and shares ISA. Then you are able to sell them without any capital gains liability.


This means that you can transfer the 10,680 into an ISA which is free of CGT then the remaining shares can be sold outside of an ISA utilising your full CGT allowance.

This forum does worry me at time, people clearly not educated giving financial advice! Worrying!

grumpyofwhitecross

samlee0211 wrote: »

good evening

i am currently coming to the end of a 3 year sharesave scheme with work, i paid in £250 a month which equates to £9000 over the three years. selling the shares now would leave me with £28000. as this is going to be a deposit for my first house i need it out in one lump sum. my question is basically how much tax will i pay?


many thanks

Is this ...save the money and at the end of the three years have the money back + bonus or exchange for shares in the company ?

shop-to-drop

Not married are you? If so you can transfer some over to your wife/husband as they would have a 10K allowance too. Well done on getting a good return OH just has to take the money since the option price is more than the current price sadly.

samlee0211

thanks for the replies, it is a saye scheme with saving upto £250 a month

gadgetmind

Credit-Crunched wrote: »

This means that you can transfer the 10,680 into an ISA which is free of CGT then the remaining shares can be sold outside of an ISA utilising your full CGT allowance.

Yes, this is a sweet trick I have used myself. Of course, the £10680 is based on current value of shares, whereas the £10600 allowance is worked out on gain.

If the OP is married, or if they can bear to wait until April 6th for the rest, they can totally avoid tax.

Failing that, the gain is "stacked" on top of earned income, interest, and dividends, personal allowances are then applied, and any gain below the HR band is taxed at 18% and any above at 28%.

Assuming that £28000 is total rather than gain ...

£28000-£10680=£17320

The gain in the whole £28000 is £19000, but the gain "left" in that £17320 is only £11752, so only £1152 of it is subject to CGT. Worst case bill is £322.80 at 28%.

Please can someone check my working!

Other issues -
1) You only have 90 days from exercise to get the shares into an ISA and you need a letter confirming they are approved options.
2) If you have done a cash ISA this year, the amount of this will be subtracted from the £10680 and if you have done a S&S ISA, then you need to use the same provider.
3) You CANNOT sell the shares and move the money into the ISA. You *MUST* ask your ISA provider to move the shares without there being a disposal. I have used Hargreaves Lansdown for this and they have always got it right.

samlee0211

thanks for your reply, i will need all of the money at once really as it will be my house deposit, not married though.

gadgetmind

samlee0211 wrote: »

thanks for your reply, i will need all of the money at once really as it will be my house deposit, not married though.

Fair enough. First off, you'll need to get the share certificate and the letter confirming they are approved options, then complete the forms to open a S&S ISA and also a share dealing account. Then send off the whole lot saying that you want to move £10680 worth of shares directly into the ISA without a disposal and the rest to be placed in your share dealing account. You can then sell everything in the ISA, and a gain of £10600 outside the ISA, this tax year without tax.

If you choose to sell more than this, you will hit capital gains on a small amount, and you will therefore need to complete a tax return and pay the tax. Your choice.

You need to ensure you're happy with all of these calculations as you'll have to do them yourself when you sell.