Shares and tax

jsaver

Hello,

I am currently a higher rate tax payer with an annual salary of approximately 70000 pounds. From time to time my company gives me shares in the company, which are awarded at a certain time, but the vest after 1, 2 @3 years. These are not options, so when they vest, I sell them at their full value, tax is withheld through the broker/payroll, and I get the remainder.

So far so good. Now it looks like my company might be acquired in a cash takeover bid, and the remaining shares might become sellable earlier than the original schedule. Depending on the amount the company is bought for, they might be worth 150-200k.

If I were to sell these straight away, what would my tax position be? Would I stray into 50% territory? How could I manage this? Can I gift shares to my wife, who does not work? What will the tax man's view be on the shares?

I have a mortgage which is on a fixed term for another 3 years, with only small overpayments permitted without penalty, so cannot just clear a huge chunk of that.

Thanks in advance for people's thoughts and advice.

anselld

It depends how the 150-250 k is treated ( check the scheme rules) ie is it an income or a capital gain.
I suspect the majority will be capital gains in which case you would pay 28% after CGT allowance but it would not push your income.

John_Pierpoint

Sometimes in these situations, the acquiring company has the ability to exchange your shares for preference shares or loan stock - this enables you to not only donate half you investment to your wife (thus getting 2 x £10,600 nil rate annual CGT exemptions but also to sell your replacement investment over more than one tax year)

Perhaps you still have the ability to suggest this sort of tax mitigation to your directors?
[I got caught like you, though on a much more modest way, by a takeover bid and it still grates years later].

jsaver

Thanks for the helpful replies. It still hasn't happened yet, but I will try my hardest to minimize what goes to Mr Osborne if it does!