How much CGT on £30K?

andygb

Have just been informed that I will be receiving around £30K on an investment based performance bonus. I have also been told that I will be liable for CGT on the entire amount.
My question is, how much should I set aside (make a provision to pay it in April I assume), or is there some way that I can invest it again and not have to pay any CGT?
Cheers.

00ec25

leaving aside the question of how certain you are that it is subject to CGT rather than income tax in the first place, you pay CGT on the gain in value so if this is indeed a bonus then I assume it is independent of the underlying investment purchase so will be £30k pure gain . (ie you cannot deduct the original cost of the investment since you are not selling the underlying investment, you are merely receiving a bonus which has "cost" you nothing)

from that you can deduct your personal allowance (£10,600) assuming you have no other gains in 12/13 leaving 19,800 taxable.

you pay CGT at 18% on the balance between your total income that year and the higher rate tax threshold 42,475 and you pay 28% on everything above that

eg: say your total income this year is 25,000 (that's salary plus dividends and any other items subject to income tax eg benefits in kind) that leaves 25,000 - 42.475 = 17,475 payable at 18% and 19,800 - 17,475 = 2,325 payable at 28% . So total tax payable on the gross 30K gain = 3,796.50 on example with 25k basic income

John_Pierpoint

You need to explain how this comes about and why you are not paying income tax on this "windfall".

How did you acquire the investment for zero value?
£1 option?

andygb

John_Pierpoint wrote: »

You need to explain how this comes about and why you are not paying income tax on this "windfall".

How did you acquire the investment for zero value?
£1 option?

It is based on a company being bought up and taken over, and the staff (including myself), who have shares in the company, being given the redemption value of the shares (less what we owe the company for them).
It is not a "windfall" as such and is very common in engineering/scientific companies.

Cook_County

As this is very common why isn't everbody doing it?

I am curious in the case why your employers are not explaining thie tax position to you along with your TUPE rights?

andygb

Cook_County wrote: »

As this is very common why isn't everbody doing it?

I am curious in the case why your employers are not explaining thie tax position to you along with your TUPE rights?

No explanations, nothing in writing, no statement showing the value of the shares, and how the amount was calculated.
You can appreciate why I am concerned (as are 70+ other employees). We had a contract when we joined, but I feel that we should have had a detailed statement showing how all of this has been calculated and the possible liability to us all.

John_Pierpoint

As some one who has been through this when holding the normal SAYE scheme with an option to purchase shares at a predetermined "cheap" price in the future (I had chosen the longest SAYE contract available in the hope that the price would look even "cheaper" by then), I have some sympathy with your confusion.
So I did a bit of research and discovered that the employees of British Gas plc had recently been in a similar situation [Cedric "the pig" had recently wrecked the financial performance of British Gas banking style by overseeing a "take or pay" series of contracts, where the gamble went against the company so that the company was now being broken up. The British Gas employees were given compensation for their loss of option profit. - don't quote me that is from memory].

I felt there were not enough employees in my situation to make my lone voice get any additional recompense for losing the options; though the managing director blurted out a garbled explanation as to why the board had not been able to secure better terms, during question time, before I had managed to ask him!?! [Guilty conscience? Quite frankly I think the board were more interested in their own futures and had simply forgotten about the "nearly" employee shareholders - We were more or less told that we should be thankful that we could carry on paying the SAYE contract to its maturity and take its cash. Some directors would have tried to use the options as a "poison pill" to discourage takeover - however I feel they might have been getting desperate for a "merger" ].

It is time to dust off your contract and see what the small print says and to present us with a worked example of how your "incentive" scheme works.

Hands up any "pleb" who has had their "TUPE" rights voluntarily explained to them.