will i have to pay cgt

silvercar

This thread started off in 2007. Remember that the CGT rules changed in April 2008, some of the earlier comments about CGT rates are now out of date.

jimbouk_2

Thanks for the help

Done a little tweaking and came up with this scenario

Total value of scheme is £29147 ,my aim is to take appx £28000 (£14000 each) in cash

Transfer 2300 shares to my wife and cash in 2300 shares myself.
Sale price of £6.08 minus purchase price of £1.95 gives a net cost of £4.13 per share subject to cgt.

2300*4.13= £9499 subject to CGT so should be within allowance

This leaves 194 shares at a value of £1179 to be taken in loan notes.

Hope this is workable

jimmo

If 4794 shares cost you £9,000 I make that £1.88 per share, not £1.95.
Subject to that, your logic is spot on.

Whilst your method of using the price differential per share works, my method, of apportioning the amount invested between what is sold and what is retained is strictly correct. In terms of planning what to do either method should work quite satisfactorily. However, when you come to completing any Tax Returns you will find that my method is exactly what is required.
It might be a little more work now but it could save you hours and hours later.

jimbouk_2

Sorry for the confusion
There was a bonus in there of £350 which equates to 179 to shares which makes the purchase price £1.95.

Chatting to colleagues this week ,everyone seems to have their own ideas of how this works , i am sure quite few people will get their fingers burnt over this one.

Thanks for the help

jimmo

jimbouk and stylus360
I am posting this reply on both threads, hopefully to cover both your overall situations.
As I now understand it you each saved £9,000 and received a “tax free bonus” of £350.
Now, I have not dealt, directly, with share save schemes for many years and don’t pretend to understand how you got a tax free bonus but if that is what you got then for Capital Gains Tax purposes that £350 bonus was your money which you invested in shares just as the £9,000 you saved in the scheme.
Effectively then you each now have 4794 shares which cost you £9350.
Taking jimbouk’s tweaked figures these now seem to be spot on.
You transfer 2300 shares to your wife and arrange for her to sell them through the scheme.
You sell 2300 shares yourself through the scheme.
You take £1179 in loan notes to be cashed next tax year.
jimbouk, the £350 bonus was the missing link and now it all makes sense.
stylus360, definitely do not tick box A, tick box C and write in 2300 (shares to be transferred to your wife.
Tick box D and write in £1179 as the amount to be taken as loan notes.
Both of you, enjoy your money but for goodness sake be very careful to keep copies of all the documents for at least the next 6 years. I assume that you are not in Self Assessment and do not make annual Tax Returns. As you will have arranged your affairs so that no Capital Gains Tax is payable there is no need to bother registering and making a Return but it is possible that HMRC could, at any time in the next 6 years, come knocking. That will be no problem as long as you have still got the paperwork

stylus360

I am in same situation but have no prtner to transfer shares, but have the option of loan notes. The difference with these is my option want a £xxxx figure and not a x amount of shares.

Is this figure calculated on the price of £1.95 or the £6.08 figure ?

Anyone ??

Cheers

wb123

After the purchase and sale you will effectively have £29,147.52. If you elect to take some of these as Loan Notes you specify how much of the money rather than how many Loan Notes. From memory they have a £1 face value (their value is not related to the purchase or sale values of the Corus shares).

On a related issue; Corus have flagged up that whilst you can transfer your shares to a spouse/partner momentarily between buying them and selling them, they cannot guarantee that HMRC will deem this as a valid transfer for CGT purposes. I have yet to obtain concrete assurance from anyone that this will work, but the indications are that a key requirement would be that you have written evidence that they were transferred prior to sale. I’m thinking that if we can get this we’re (probably) safe. If anyone has more on this do tell J

Hope this helps.

wannabemoneysaver

Folks, I know this is a horrible thought, but having taken loan notes, what would happen if Corus went under in 6 months time?

Are we secured / unsecured creditors, or are they guaranteed in some way?

Just trying to cover all the bases....

wb123

Indeed - presumably we would be creditors of 'Tata Steeel UK Ltd' and there is therefore a risk. Another reason to explore the inter-spousal transfer option I think!

And also bear in mind the earliest oprtunity for redeeming the Loan Notes is Nov 08, s o you'd want to be confident that Tat Steel UK is still solvent by then!

stylus360

Where does it state that Nov09 is the earliest you can redeem loan notes ?

Cheers