Shares saver scheme maturing

Dave210782

Please could someone provide me with some advise. My 5 year shares are about to come to end and I have the option to buy at good rate and sell to make profit. But here is the issue. I am able to earn, I believe tax free a profit of £11.300.before being forced to pay capital gains tax. My profit would potentially be about 15k if this company takeover happens which will compulsory purchase all shares at good rate.

I have option to (sell some) now @ whatever the going rate is and keep the rest shares at discount rate, or (Buy them all) at the discount rate,to be sold later at better rate or do nothing which isn't option, but I need to make decision soon. So my question is is there anyway I can sell some but genuinely give the money to my kids savings isa for them when they are older and pocket the rest and put mine into our family isa (without paying capital gains tax.)


Can anyone provide any advise please. I am on basic rate tax and we are modest family with normal outgoing.
Any advise would be much appreciated.
Thanks

redped

Is it an HMRC-approved SAYE scheme? If so, then you can transfer up to £20K-worth of shares to an ISA:

https://www.gov.uk/tax-employee-share-schemes/transferring-your-shares-to-an-isa

https://www.tddirectinvesting.co.uk/stocks-and-shares-isa/how-can-i-transfer-shares-into-my-isa

Likewise, you can also gift some of the shares to your spouse or civil partner:

https://www.gov.uk/capital-gains-tax/gifts

I've done both of these before - it's actually a simple process, and didn't take long for the shares to be transferred.

You could then sell the remaining shares, and any profit over £11,300 would be liable for CGT - the post-CGT profits could go in to saving ISAs for the children.

Dave210782

Hi thanks for your quick reply not sure if it's HMRC Saye or not but could find out though work. ,you said you gifted some to your spouse was this done though the share company on your behalf. I might ring them and ask if it's a simple process like you said. That sound like good idea and my spouse is only on part time wage doesn't even pay tax, so if could avoide CGT and help her our that be helpful. We intended to put large sum into the kids savings account too. Thanks again for your advice.

redped

There are several ways to spit the shares, the following is just one approach:

As an example, say you would receive 100 shares in the company when they vest (to make the numbers easier).

Just before they vest, you'll most likely be asked what you want to do with them, e.g. sell some/all of them immediately, receive a certificate for them, etc.

So depending on the values involved, your next steps may be to:

1. Sell 20 of them immediately (and put the proceeds into whatever children's accounts you have), and receive a certificate for the remaining 80.

2. Ask for a letter of appropriation (also called the notice of exercise) - this is simply a letter from the company running the sharesave scheme, saying that the shares are coming from an HMRC-approved sharesave scheme (if this is definitely the case). This will allow you to then transfer them in to an ISA.

3. Open two accounts with whichever stock trading company you prefer (we used Halifax, for reasons below), assuming you don't already have any accounts.

4. Get your wife to open a normal trading account with the same company.

5. When you physically receive the certificate for the remaining 80 shares, send it to your stockbroking company with the letter of appropriation, as well as a letter explaining that you would like to:

(a) transfer as many of the 80 shares into your S&S ISA as possible (they'll work out the number of shares that have a value as close as possible to the £20K limit - this is the value of the shares, not the profit you'll make by selling them); for this example, assume that equates to 50 shares

(b) transfer the remainder of the shares (in this case 30) in to your normal trading account

6. When both steps have been completed (which may be a week or two), it's time to transfer some of the 30 shares from your trading account to your wife's trading account - Halifax have a form for doing this at https://www.halifax.co.uk/sharedealing/transfer-your-existing-investments/Default.asp, click on the "Transfer between accounts" tab. Let's assume you want to transfer 15 shares to your wife, and keep 15 for yourself; fill the form in with details of both her and your accounts, and send it off.

7. After a week or two, the transfer should complete - you should hopefully now have:

50 shares in your S&S ISA, on which you won't have to pay any CGT when you sell them
15 shares in your trading account, on which you may have to pay CGT (if you make more than £11,300 profit when you sell them)
15 shares in your wife's trading account, on which she may have to pay CGT (if she makes more than £11,300 profit when she sells them)
money in the children's accounts from the sale of the 20 shares


I know there are a number of steps here, with accounts to be opened, forms to fill in, and time taken between each step. However, when it's your own cold, hard cash it pays to do it. Just remember to take your time, do it all carefully, and make sure you fully understand the steps. Depending on the level of profit, you may not need to do all the steps - I was looking at about £45K profit, hence the need to put some in my ISA, gift some to my wife to use her CGT allowance, and keep the rest myself to use my CGT allowance.

One caveat is that it was couple of years ago I did the above, and to the best of my knowledge the steps are correct and still the way to do it. Others may suggest slightly different approaches, and that's fine - I just know that it worked for us, and saved a large amount of CGT.

Dave210782

I will look into this, hopefully just gifting some to my spouse will spread the CGT so I don't have to pay any. If they are compulsory purchased we can save most into saving/ISA for us and the kids.

Thanks again for your advice.
Really appreciate it. 👍