So what are the options? I'm out of my depth

Tahiti

My wife is lucky enough to have a sharesave scheme at work, and a 5 year plan is coming to its end shortly. The value (in terms of what the shares would market at today) is just over £4,000.

As the shares are not exactly at their peak at the moment and the company is solid, we are looking to hold them for a while.

My wife (and me for that matter) have not used the ISA allowance (we don't have other savings to do this with), and wondered about putting these shares into a S&S ISA. Considering the costs involved, is it really worth doing though?

If we use their selected providers ISA wrapper, we would not have to sell and buy back the shares (which I understand that we would need to do if using another ISA provider), but the costs per annum are £30 +vat (which increase inline with the value of the shares) plus any dealing charges. This compares to just holding them on a Nominee Account.

Any tips would really be appreciated!

Thanks
R

gt94sss2

Tahiti wrote: »

My wife (and me for that matter) have not used the ISA allowance (we don't have other savings to do this with), and wondered about putting these shares into a S&S ISA. Considering the costs involved, is it really worth doing though?

That depends a variety of things including:

- your/your wife's rate of income tax
- how much further you think the shares will go up

However, don't forget that everyone has an annual Capital Gains Tax allowance - currently £9,200/year - so you can make this much without paying CGT.

If we use their selected providers ISA wrapper, we would not have to sell and buy back the shares (which I understand that we would need to do if using another ISA provider), but the costs per annum are £30 +vat (which increase inline with the value of the shares) plus any dealing charges. This compares to just holding them on a Nominee Account.

That is normally true.

However, in the case of:

1. a savings-related share option scheme
2. an approved employee profit-sharing scheme
3. an employee share ownership plan.

shares can be transferred into any share ISA without having to be sold and repurchased (as long as you haven't already used your allowance) so you are not limited to using their selected ISA provider

There are some ISA providers who charge no annual fee and others like Selftrade who charge a flat fee/year (don't forget you can also be referred to them)

Regards
Sunil

Tahiti

Thank you Sunil. These will be the only shares that we hold aside from a small number of demutualisation shares that my wife still holds. Both of us are Basic Rate tax payers and we don't have any other savings worth mentioning.

Interesting to hear that we can put the money into another providers wrapper without having to sell - that's not what we were told so thanks for the info!!

Let's see what she thinks...

gt94sss2

Tahiti wrote: »

Thank you Sunil. These will be the only shares that we hold aside from a small number of demutualisation shares that my wife still holds. Both of us are Basic Rate tax payers and we don't have any other savings worth mentioning.

Given what you say above, there appears to be little advantage for you in holding the shares in an ISA - unless you expect your tax band to change in the future.

I also don't know the value of your other shares or how much you expect/hope the shares in your wife's company to go up - but do remember that the annual Capital Gains Tax allowance is per person - so unless you expect to exceed that the advantages of a share ISA seem limited.

However, if you do want a shares ISA without an annual fee I was referring to those operated by HSBC InvestDirect and/or Alliance Trust.

On a broader note, especially if you do not have to much in other savings, it can be a mistake to have too much in the shares of the company one works in! (eggs in one basket etc)

Regards
Sunil

Tahiti

Thanks Sunil - I know what you mean about eggs in baskets, but the shares are in a huge PLC and are trading relatively low at present. Don't get me wrong, I don't expect a huge increase in value short term but I don't see them dropping hugely from where they are now, and we do have emergency funds if required.

The thinking on the ISA is to wrap them up on the basis that we plan to build up a worthwhile holding over time and this will just be the initial stage. However, just holding the shares outside of an ISA and using the CGT allowances as you've pointed out is not going to cause us issues in the sort term.

Thanks for your thoughts - they are appreciated.