Transferring sharesave shares into an ISA

short_butt_sweet

no, that won't work.

in the case of a transfer to anybody other than a spouse or civil partner (including to a fiance(e) or family member), if you don't sell the shares to them for the market price (e.g. it's a gift), then (for capital gains tax purposes) your disposal is treated as if you had sold for the market price at the time. so that achieves nothing.

the £3000 thing is to do the inheritance tax. doesn't help with capital gains tax.

you could always elope

flopsy1973

so there no way out? do i have to declare this or will they automatically collect the tax

Vortigern

As suggested in post #21 - Sell some shares before the tax-year end to fully utilise this years CGT allowance. You have a new allowance next year, so you should get at least two years worth of allowance.

Also remember you haven't made a gain until you sell some shares. You are sitting on a potential(paper) gain. The paper gain is not taxed until you sell.

AFAIK CGT is not collected automatically. You have to declare it to HMRC.

flopsy1973

Yes that is what I'm planning . Can I claim from previous CGT year allowance? How would hmrc know if I didn't declare it ?

Vortigern

No, you can't use previous year's allowance.

I don't know how HMRC would discover your gains. I've always managed to avoid making a taxable/reportable gain.

Yours is a nice problem to have. Many would be envious of such a large gain. Some would suggest that we need more tax collected in order to fund the NHS etc.

flopsy1973

anybody done this and not reported the gain how do hmrc know?

also been told i could put some into my pension to avoid the CGT?

from the comment above regarding section 104 holding i cant just go and sell the first sharesave scheme to use this years allowance ?

flopsy1973

Hi
Can I ţransfer these into isa and pension? And I read somewhere I have to sell them in certain way ?

flopsy1973

Read about the section 104 holding seems very confusing do I need to sell this way? Planning to sell just enough this tax year up to cgt limit. Can I jus sell them the other way going on the original price rather than working out the average etc

Vortigern

flopsy1973 wrote: »

Read about the section 104 holding seems very confusing do I need to sell this way? Planning to sell just enough this tax year up to cgt limit. Can I jus sell them the other way going on the original price rather than working out the average etc

You have to use the section 104 valuation. No choice.

This post by bowlhead99 may help.

bowlhead99

flopsy1973 wrote: »

Hi
Can I ţransfer these into isa and pension?

You can transfer maturing sharesave shares into an ISA within 90 days of exercising your option to buy them, if you have unused ISA allowance. So if you are allowed to exercise your options now and you have not used any of your £20k ISA allowance for 2018/19 at all, you could put £20k-worth of the shares into the ISA.

If the shares are worth, say, £8.33 at the time they go into the ISA, you will only be able to fit 2400 shares into the ISA without exceeding the £20k limit. But because they have gone from an approved scheme into the ISA within the qualifying time limit, they can go directly into the ISA (subject to the ISA manager accepting them) without needing to be sold, so there is no CGT on them because you didn't dispose of them outside the ISA.

It is also possible to transfer maturing sharesave scheme shares into a pension within 90 days after exercising the option (again, subject to the pension manager accepting them) and then you would get income tax relief in the same way as if you had made a cash contribution to the pension scheme for the same value (the market value of the shares when you transfer them. However, when the shares leave your ownership and are transferred into your pension scheme trustee's ownership, you will have made a capital gain - the difference between what they are worth when you dispose of them to the pension (e.g. £8), and what you paid to acquire them (e.g. average cost of £4).

As you are buying the shares at a nice discount to market value, there will be an unavoidable gain when you dispose of them, whether you dispose of them by selling them on the stockmarket, giving them to your dad, or transferring them into a pension plan.

The only way to avoid creating the gain for CGT purposes is not sell them at all (impractical if there is a takeover coming up) or to use the special rules to transfer them into your ISA.

And I read somewhere I have to sell them in certain way ?

We don't know what you have read. Once you have exercised the option to buy the shares you can sell them however you like. How and when you dispose of them and for what price will affect the amount of CGT due.

flopsy1973 wrote: »

Read about the section 104 holding seems very confusing do I need to sell this way? Planning to sell just enough this tax year up to cgt limit. Can I jus sell them the other way going on the original price rather than working out the average etc

All the shares are identical. If you buy a bunch of them at one price and then you buy another bunch of them at another price, and you are holding all these shares at the same time, then overall your cost of any one of the shares is the average price you paid.

Example: 2811 shares option price £3.201 costs you about £9k. 1804 shares option price £4.986 costs you another £9k. So you have spent £18k on the 4615 total shares, which is £3.90 per share. You can't just arbitrarily decide that you are selling the ones that cost £3.20 or the ones that cost you £4.99 and choose to make a bigger or smaller gain. You own one big pile of shares and you are selling some of them; if you paid an average £3.90 a share for all the shares you own , and you sell some, the cost of your sale is £3.90 times the number of shares you sold.

If you are given the ability to exercise the options at different times you could exercise the option to buy one batch (e.g. for £4.986) and then while those are the only shares you hold, sell them quick and then wait at least 30 days before exercising any more options to buy any other batches. That way, the cost associated with your sale will definitely be the £4.986, because they are the only shares you own so there is nothing else in the 'section 104 pool', and you are not buying any more shares within 30 days afterwards so don't need to match any of the the later-purchased shares to the disposal.