Does it matter what point in the tax year I cash in BAYE shares?

Looter

I am enrolled in a BAYE share scheme at work and I can get the shares tax free after 5 years. If I need to cash in earlier I have to pay tax and NI on them through my wages, is there a good or bad time to cash them in? I'm thinking that if I cash in early in the tax year the powers that be will think I'm going to be earning that kind of money every month so will therefore be paying too much tax so it would be better to cash in towards the end of the tax year. Am I correct in thinking this? Thanks!

jimmo

You are, sort of right.

If you cash in early in the tax year there is a good chance that the additional taxable income that will be added to your wages will distort your annual rate of income.

You may then be charged tax at a higher rate via your PAYE deductions but it will balance out over the remainder of the tax year.

Regardless of when you cash in your PAYE deductions should be correct by your final payday in the tax year.