Transferring sharesave shares into an ISA

flopsy1973

Yes they are all as you said with the 1891 sold out of the first lot that matured leaving me with the balance the others then followed. So will this make difference to the price

Vortigern

flopsy1973 wrote: »

Yes they are all as you said with the 1891 sold out of the first lot that matured leaving me with the balance the others then followed. So will this make difference to the price

Probably, but I'd need precise dates of purchases and of the bed & ISA.

Make a list in chronological order. (Use a spreadsheet)
Each purchase adds a number of shares to the pool and about 9000 to the cost of the pool. Work out the running average cost of the pool after each purchase.
The bed/isa will reduce the number of shares in the pool and reduce the cost of the pool by the number sold x running average.

You've been drip feeding information to us a little at a time and leaving us to read between the lines to work out your position. I have to go now. You'll have to work it out for yourself.

flopsy1973

Due to me having no documentation for the first lot of sharesave that matured other than historical share save prices and some details iv written down below is the time line of share purchase

2010 6186 shares at option price 1.46
2012 2811 shares " " 3.20
2014 1804 shares 4.98
2015 1784 shares 5.04

In march 2015 sold 1891 @ 7.93 out of the original 6186 to bed and isa this has left 4295 of the original 6186 shares so will this make a difference to my average price and how many I can sell as I really need to get on with this as tax year end approaches
Thanks

eskbanker

flopsy1973 wrote: »

Due to me having no documentation for the first lot of sharesave that matured other than historical share save prices and some details iv written down below is the time line of share purchase

2010 6186 shares at option price 1.46
2012 2811 shares " " 3.20
2014 1804 shares 4.98
2015 1784 shares 5.04

In march 2015 sold 1891 @ 7.93 out of the original 6186 to bed and isa this has left 4295 of the original 6186 shares so will this make a difference to my average price and how many I can sell as I really need to get on with this as tax year end approaches
Thanks

You'd previously indicated that your 2015 bed & ISA sale was before you'd acquired any subsequent shares but you're now saying that you had already bought several batches before 2015! You're still not making it clear whether the 1784 shares acquired in 2015 were before or after the sale of 1891 in March, which does affect the figures....

However, either way round, those shares you sold in 2015 would have been regarded as having a buy price of your running average at the time, not the original purchase cost of 1.46.

bowlhead99

eskbanker wrote: »

You'd previously indicated that your 2015 bed & ISA sale was before you'd acquired any subsequent shares but you're now saying that you had already bought several batches before 2015! You're still not making it clear whether the 1784 shares acquired in 2015 were before or after the sale of 1891 in March, which does affect the figures....

However, either way round, those shares you sold in 2015 would have been regarded as having a buy price of your running average at the time, not the original purchase cost of 1.46.

The drip feeding of info and the different ways to describe events is frustrating when the person seems to want someone else to do the calculations for them rather than do it themselves despite having been told how it works.

I suspect the dates/ years here, despite being described as "time line of share purchase" are not the dates of purchasing the shares at all, and are simply the years in which they started to put the first few pounds into a savings scheme which would eventually be used to buy the shares at the option price - the purchase of shares would actually occur during the six month exercise period after the scheme matured some three or five years after it started

They did mention back in post #50 that the march 2015 disposal of 1891 shares out of the first 6186 shares (leaving 4295 of the shares remaining, which had been acquired for 1.46 each), happened before the scheme for the 2811 shares matured, because that was not until October 2015. So we know going into October 2015 they had 4295 shares with a cost of about £6270 and then they acquired another 2811 of them for another £9000, so after they do that purchase they'll own a total of 7106 shares, with total cost of (£6270+9000 = £15270).

The 2014 purchase date for the next batch of shares is also likely a red herring as back in those days the limit that could be saved for option schemes maturing in 2014 was £250per month, and they already had another concurrent scheme that was maturing in 2015. Instead, the 2014 date will be when they started another scheme (rather than finished saving and purchased shares under a scheme), which ties in with the fact that from 2014 onwards the maximum allowable savings limit was raised. .

Presumably the options under this '1804 shares at £4.98 each' scheme have now been exercised and so the cost of buying those shares will be added to the previous £15270 cost of buying the other 7106 shares to give a bigger total cost and a bigger pool of shares, giving a new average price for any shares sold after that point.

And the 1784 shares marked as 2015 on the purchase timeline are the ones which actually matured in Oct 2018, where the option has recently been exercised and they're going to be being transferred directly to an ISA under the special rules so they won't come into the discussion of what shares are being sold to use up the CGT allowance.

eskbanker

bowlhead99's post seems to have a more plausible explanation, so the truth, in term of actual share purchases (at maturity) and sales, would seem to be:

Oct 2013 [STRIKE]2010[/STRIKE] 6186 shares bought at option price 1.46
Mar 2015 1891 shares sold @ 7.93 [which, at £12,235, would have been a gain above the CGT threshold]
Oct 2015 [STRIKE]2012[/STRIKE] 2811 shares " " 3.20
Oct 2017 [STRIKE]2014[/STRIKE] 1804 shares 4.98
Oct 2018 [STRIKE]2015[/STRIKE] 1784 shares 5.04 being transferred directly into ISA

If this is the case then Vortigern's analysis at post #46 remains spot on, nothing further needs to be added!

flopsy1973

Yes sorry for the explanation of above and some of the things I have got wrong. As I had answers off you it made me think of other things I needed to consider.Just like to say thanks for your help
One final question if the ones I sold for 2015 was over the cgt amount I have not paid cgt on these why? So the buying and selling of these into isa only protects it from future cgt?

bowlhead99

When you sell something for more than you paid for it, it is a capital gain and subject to capital gains tax. You might not need to pay any tax if it's all covered by your annual exemption for a particular year, or it's covered by losses you made by selling other things for less than you paid for them.

So, if you sell shares and make a profit, you might decide to use the proceeds to invest in a cash ISA or investment ISA, or invest in a pension, or you might decide to save it in a bank account for a rainy day, or you might decide to treat your friends and family to a massive party. Whatever you do with the money afterwards doesn't stop you having made the profit. You made the profit when you sold something for more than you paid for it.

It follows that if you sell shares *outside* an ISA or pension (where there is no protection from CGT, other than your annual exemption), you may need to pay tax. If you then decide to put some or all of the resulting money into an ISA you will not need to pay tax on future profits made inside the ISA, because profits made inside the ISA are not taxable. But what you are doing with the money in future (inside an ISA) does not get you out of owing the tax on the profit you made outside the ISA. So it is as you say. The selling and buying again inside an ISA will protect it from future CGT, but does not get you out of CGT that you owe from profits you have made.

There is a special case which allows you to directly *transfer* shares you have bought in a SAYE scheme into an ISA within 90 days of exercising the option to buy the shares. If you follow the ISA manager's rules to transfer the shares in, and provide the paperwork to prove you got them from the SAYE scheme, you do not need to do the longwinded and taxable route of selling the shares for cash outside the ISA, subscribing the cash into the ISA, and then using the cash in the ISA to buy the shares again. A direct transfer into the ISA avoids needing to sell for cash outside the ISA, and as there is no sale outside the ISA, there can't be any taxable gain. You only get a taxable gain when you sell something for more than you paid for it, outside the safety of an ISA or pension.

If you are transferring 1784 shares into the ISA now after just exercising your option to get them - and you are doing that as a transfer, without selling - they will not create a gain because you are transferring, not selling. The selling can be done tax free inside the ISA.

Whereas in 2015 when you told us in post #48 and #54 that you bed and breakfasted 1891 shares to fund a £15k ISA (which involves selling outside an ISA to get the money to buy the ISA), you would have made a gain of £15k proceeds of those shares less the £2761 cost of those shares.

if the ones I sold for 2015 was over the cgt amount I have not paid cgt on these why?

You presumably didn't pay CGT because you didn't calculate your gain and tell the taxman you owed him.

But you do know that tax is due on gains which is the whole reason you are trying to create a gain this tax year to use up your annual exemption, and transfer your most recent scheme shares into the ISA to avoid making gains on those.

So if you know you should be paying tax and you didn't pay the tax by the due date of January 2016 (for gains in the tax year 2014/15), you can pay it now, there won't be too much interest to pay if you own up to your mistake.

Fortunately, your pending sales this tax year and next will give you lots of proceeds so you can afford the tax.

flopsy1973

Which is why I asked the question it was my mistake not to pay that tax back then. So how would hmrc know this would be due for the next year ?

eskbanker

flopsy1973 wrote: »

Which is why I asked the question it was my mistake not to pay that tax back then. So how would hmrc know this would be due for the next year ?

They wouldn't - in general HMRC will only know what you (and your employers) declare to them, but as covered in numerous other threads they're getting more independent access to data directly from financial institutions, so failing to declare a known tax liability isn't recommended!

Perhaps you could claim ignorance in 2015 but now you know you should have paid tax then it's your responsibility to come clean.

Given your intention to try to align an imminent sale with the CGT threshold, it seems odd that you'd have sold shares in 2015 that breached that threshold by a relatively small margin, what drove your calculation of how many to sell back then?