Company save as you earn scheme help please

rrwfotr

Hi I need some help please....

My save as you earn scheme at work is coming to an end, I have been buying shares for the last five years with work @ 2.18 per share for £250 a month. At the end of the 5 year period I have been given a bonus of £1500 pounds therefore I have approx 7591 shares in the pot. I have now been sent a form to ask whether I wish to buy the shares and put them into company scheme call easyshare (think they just get stuck into a electronic share account with no admin fee), get the money back, or buy the shares and put a portion into a Halifax 1sa scheme (which charges 0.05% a month to a max £8.66 a month = £103.92 to shelter the shares from tax etc) my question is what should I do?

The current company share price is £3.12 therefore shares market value is 3.12 x 7591 = £23683.92

Should I put the shares in a maxi isa for up to 7k which will attract a fee of approx £8.66 a month for doing nothing. Rest gets put in normal Halifax share deling account ( I don't intend to sell for two years) or should I put them into the company easysave scheme run by lloyds.

I am totally clueless what to do really all I know is that I don't intend to sell them for at least two years and I don't want to attact a massive tax bill in two years time if I want to sell. Has anyone out there got any advice I'm married so could I in the future transfer some of the shares in my wife’s name as she does not use her tax limit every year. Any help/advice would be most appreciated, thanks.

Mr_Mumble

It is highly unlikely there would be a large tax bill.

The Capital Gains Tax allowance is currently £8,800 per tax year. Presuming you don't have other CGT events (usually other sales of shares or sale of a secondary property) then you wouldn't have any tax to pay if you sold the shares at the same price they're currently worth:

Sale price
3.12 x 7591 = £23683.92

Purchase price
2.18 x 7591 = £16548.38

£23683.92 - £16548.38 = £7135.54

£7135.54 is less than £8,800 so no tax to pay.

However, if you're keeping the shares for a couple of years there is a good chance their worth will exceed the annual allowance. This is still easy enough to circumvent since you can transfer ownership of some of your shares to your spouse who can use their £8,800 allowance. Or, you could simply not sell the whole amount and split the sales between tax years.

As an employee of the company your shares in the company also receive CGT business taper relief. In this case only 25% of any CGT charge will need to be paid if you exceed the allowances. If you're a higher rate taxpayer that effectively means a 10% tax rate on capital gains above annual allowance and 5.5% for basic rate taxpayers.

Whether to choose the Lloyds registrar scheme or put a portion with Halifax will depend on a number of factors. An important one being are you a higher rate taxpayer? If so you will get a higher dividend payout by tax protecting the money in an ISA. Don't use this option if you've taken out any other ISA, including cash-mini, this tax year.

The particular ISA option (Halifax) you've been given is more costly than many. I make the fee on the £7K maxi-ISA to be £3.50pm, £42 a year. The fee will continue to rise as the share price rises. In comparison the likes of Selftrade charge a flat fee of £25 per year no matter how much the shares in the ISA are worth.

t_i_g_e_rr

The SAYE scheme I was part of allowed me to opt for a paper certificate. I did this and deposited it with a company of my choice (for me, hoodless brennan). If you can do this it allows you to choose the best company for you. Most don't charge for depositing paper certificates into an online account.