SAYE - CGT on sale of shares

nathanjohn

Hi All,

My first post, be gentle!

I have looked through the forum but can't find an answer to my query. I''m hoping someone on here can help.

I have a SAYE share save scheme with my current employers. The current value is approx £31,920 based on today's price. If I take off what I paid £7200 and my CGT allowance it leaves £14,120.

I have heard about transferring the remainder into a stocks and shares ISA. (I know the limit is £10,680 so would still leave about £3440 to pay CGT on when i sell the shares). However, my main question is two fold:

(a) Is there minimum amount of time that I would have to hold the shares in an ISA for the CGT benefit to become applicable?

(b) If yes, could I change what I was invested in within the ISA to something less risky such as a cash equivalent fund.

Thanks in advance for your help.

Nathan

ceeforcat

If you transfer shares into an ISA it is a disposal and liable to capital Gains tax. The ISA protection only applies to shares already purchased via your ISA and held in an ISA until sold. Why don't you hold back £11280 (why always nice round numbers?) worth of shares until April 2012 and do exactly what you have suggested?

Mikeyorks

ceeforcat wrote: »

(why always nice round numbers?)

Divisible by £120. In order to make life easy for those rather odd 'regular payment' ISAs.

ceeforcat

Mikeyorks wrote: »

Divisible by £120. In order to make life easy for those rather odd 'regular payment' ISAs.

Very good. I meant for everything - CGT exemption, personal allowance, NIC band, age related limits - bugs me!

pjclar02

Hello there

I believe that you have to transfer the SAYE shares into the ISA within 90 days of exercise in order to avoid capital gains tax on them (are you still within this window?). I don't believe there are any further time constraints in order to maintain the CGT benefit. Therefore, you could sell the shares immediately and have no capital gains tax to pay on this element of the shares. However, you will need to check whether your selected ISA is able to house the shares in question - and this will probably involve asking an independent financial adviser to find one for you. Therefore, I would check the point with the IFA for absolute certainty.

As Ceeforcat mentioned, for the remaining £3,440 worth of shares, you could consider deferring selling these until the following tax year to use next year's annual exempt amount - or alternatively if permitted to do so you could transfer to your wife (if married) to make use of her annual exemption.

MoneySaverLog

My understanding of it is you can make a gain of £10,600 for this tax year before you have to pay CGT. So if you paid £7,200 for the shares you could sell £17,800 worth of shares now, then sell another £10,600 or whatever the CGT allowance was for next year on April 6th.

You'd then have £3,520 worth of shares you'd have to hold onto but you've made a good return on investment there.

This all asumes of cause you've not made any other gains. You may also be able to offset any loses on other shares you've sold in the tax year. Not sure about that point though, never been lucky enough to worry about CGT.

ceh209

MoneySaverLog wrote: »

My understanding of it is you can make a gain of £10,600 for this tax year before you have to pay CGT. So if you paid £7,200 for the shares you could sell £17,800 worth of shares now, then sell another £10,600 or whatever the CGT allowance was for next year on April 6th.

Not exactly, if you're only selling e.g. half the shares, then you're only allowed half the cost.

e.g. sell half for £15,960, cost of £3,600 = gain of £12,360.

Engineer it to sell the right amount and you can leave yourself with a gain of £10,600 which will be exempt.