If I sell my shares, how do I figure out what tax and NI I will pay?

*Kat*

I have BAYE'd £1500 worth of shares, and want to sell them to buy myself a car...but I'm not sure how much tax/NI I'll have to pay.

Is there a way of figuring it out? I'm currently a student (747L code) I make only about £5500 per year :S

ctdctd

Answer - nothing.

Selling shares is a capital gain and you can make a gain of £10,600 per year without paying any tax!

HTH

Edit: Not sure what you mean by BAYE though!
Edit to edit: Ah, ignore me then!

*Kat*

Buy as you earn, and it says because I've not had them for 3 years I need to pay Tax and NI on it lol

agrinnall

Yes, because the shares were purchased from your salary before tax and NI were applied they effectively cost you less in the first place, but if you haven't owned them for the qualifying period when you sell them then the tax and NI has to be repaid. i don't know how the calculations is done, I would suggest in the first place you ask the place where you were employed if they can calculate it for you, failing that you could try the share registrars (who may or may not be able to help) or HMRC themselves. I assume you will have received some sort of statement, probably annual, showing what shares you bought and what you paid for them, HMRC would probably need information from that to be able to work out what you owe.

PS What you earn now is almost certainly irrelevant, it's what you were earning at the time you bought the shares that will determine what you have to pay.

cmorgan091

Ok, I am not sure if this is a global rule or just what is in place at my company, so first of you should consult your company share scheme operator.

For my BAYE scheme the tax repayment is as follows:

Shares owned for less than 3 years: Tax + NI on current value of shares (so for you circa 22%)

Shares owned for less than 5 years: Tax + NI on current or purchase value of shares, whichever is lower

Shares owned for 5 years or more: No Tax or NI to pay.

Also you may find that some or all of your dividend shares are forfeited in the lower yearly brackets.

Owing to the fact you have 1500 and assuming you put in the full amount, I assume you have been purchasing these shares for a year. In that time it is likely that the share price has not risen much at all (please give more details) and so I have to question why you are selling? These are long term investments.

Are you leaving the company? If so it may be worth checking the clauses on this, for instance with me, if I am made redundant then no Tax or NI is payable...

If you are staying with the company for the foreseeable future I would urge you to try and keep them in as the BAYE scheme is very good, as it is a 22% gain on day one and most companies give dividend shares of 10%. Just my 20p

*Kat*

Yeah...I know I should keep them, I started the SAYE too last year (I'm a student but plan/hope to stay at T one day a week to keep the shares going when I graduate) I've got about £2k in total now (not including SIP) I'm just impatient and want a car so bad - I !!!!!!! hate the cold!

cmorgan091

Hi Kat,

In that case I would consider suspending your BAYE payments, presuming you are paying the max (£125 gross) then you would have an extra ~£90 a month to save towards a car

Are you ok to say what company you work? The purchase and current value of the share price will be important, although I am pretty sure that if there is a chance you will stay at this company for quite a few years (while a student, how many years left?) then it could be a nice little earner.

Re: SAYE, was this 3 or 5 year and how does the option price compare to the current market price?

agrinnall

cmorgan091 wrote: »

then it could be a nice little earner.

Or an appallingly bad decision - but then, I was working for RBS pre-crash .

cmorgan091

agrinnall wrote: »

Or an appallingly bad decision - but then, I was working for RBS pre-crash .

Agreed completely, hence the point of asking the question on the company and being aware of the risk nature of buying shares in any company.

Out of interest, were you at RBS in the previous good years and benefitted from a highly advancing share price and the SAYE options provided at that point? I wondered if it was a complete loss or whether the two have balanced out over time?

sabretoothtigger

The two have not balanced. Its price almost completely collapsed, not even Gordon Gecko or Brown could have a made profit on that one

I have a relative working at Barclays in 2008 who opted out of the scheme and instead waited to buy on the open market. Dont they basically give a fixed price option, so really the odds and returns on that are what need to be calculated.
Options normally cost money, I wouldnt throw that away


The advice to suspend is good but probably a bit late. What the lowest a fix rate loan is given at now, that actually could be a better idea then paying the same percentage amount of taxes on your savings. In fact it might be a lower percent

If this is Tesco which pays a dividend that might work quite well, most companies are more risky

agrinnall

cmorgan091 wrote: »

Agreed completely, hence the point of asking the question on the company and being aware of the risk nature of buying shares in any company.

Out of interest, were you at RBS in the previous good years and benefitted from a highly advancing share price and the SAYE options provided at that point? I wondered if it was a complete loss or whether the two have balanced out over time?

The BAYE shares were a total negative outcome, I was there for 5 years but I didn't sell any while they were in profit. You could argue that the profit share ones I received are still making something from nothing but it would be a weak argument as I gave up cash profit share in their place. The only good result was that I was unable to exercise my share save options so I got the cash that I'd put in back plus a bonus for saving for 5 years, had I stayed long enough to take the shares my losses would have been a lot bigger.