How to sell half of the shares I hold?

John-K_3

I am forced to hold shares in my employer, some of my pay is retained in this form for five years, and I cannot hedge or sell them. I nowadays sell all that I can as it becomes available. The correlation between share price and job security makes them an awful investment for me.

bowlhead99

aspley wrote: »

I saved £9k via a SAYE scheme and bought the shares when that matured in August 2015. They are now worth £30k so £21k profit. If I sell all of them, I'll take a hit on CGT. If I sell half in March and the rest in April, I believe I'd be clear of CGT. Does that sound right?

I'm using the proceeds as a down-payment on a property.

Yes it does sound right, as per your other thread. You could have just carried on using that one really.

However in that one you were talking about keeping the shares until 2019 when you wanted to buy the property, perhaps in an ISA for example. Whereas if you are now thinking of selling half now and half in April and *not* buying them back inside an ISA, you will miss out on the risk of taking a 50% or greater catastrophic loss on your £30k as they crash in value over the last year or so before you plan to buy the property.

aspley

bowlhead99 wrote: »

Yes it does sound right, as per your other thread. You could have just carried on using that one really.

However in that one you were talking about keeping the shares until 2019 when you wanted to buy the property, perhaps in an ISA for example. Whereas if you are now thinking of selling half now and half in April and *not* buying them back inside an ISA, you will miss out on the risk of taking a 50% or greater catastrophic loss on your £30k as they crash in value over the last year or so before you plan to buy the property.

To be 100% accurate, I am now going to use the £30k to pay off my existing mortgage. Then, in 16 months time, will be buying another property. I was going to use it as a deposit but will use it now to.pay the mortgage off instead.

The share price has gone from £4.50 5 years ago to £17.50 in the New Year but plummeted to £14.50 earlier this month. It's now around£15 and I reckon sell soon and enjoy being mortgage-free. For 16 months.

bowlhead99

Assuming you are a basic rate taxpayer the tax on selling all the 2000 shares today for £15 each would be: £30k proceeds less £9k acquisition cost less £11.3k annual exemption equals £9700 gain; basic rate capital gains tax at 10% on that is £970.

Alternatively you could sell (say) 1075 shares now for £15 each (£10.50 per share profit, equals about £11280 total gain within your 2017/18 allowance of £11300) and then you would have 925 shares left unsold, which are valued at £15, being worth about £13875 in total. You can keep them another six weeks or so and then sell them. However if there's a 7% fall in value (e.g. about a pound a share drop from £15 to £14 within the next six weeks before you get to sell them), you will lose over £900 and might feel it was just better to have got rid of them this week and paid the tax.

The tax calc is a bit different if the gain would push you into being a higher rate taxpayer in which case the CGT rate is 20% of your profits instead of 10% and a bigger tax cost from selling them all now ; in which case you have a bigger 'margin of safety' before it becomes a bad decision to wait until April while risking a further price slump.

aspley

bowlhead99 wrote: »

Assuming you are a basic rate taxpayer the tax on selling all the 2000 shares today for £15 each would be: £30k proceeds less £9k acquisition cost less £11.3k annual exemption equals £9700 gain; basic rate capital gains tax at 10% on that is £970.

Alternatively you could sell (say) 1075 shares now for £15 each (£10.50 per share profit, equals about £11280 total gain within your 2017/18 allowance of £11300) and then you would have 925 shares left unsold, which are valued at £15, being worth about £13875 in total. You can keep them another six weeks or so and then sell them. However if there's a 7% fall in value (e.g. about a pound a share drop from £15 to £14 within the next six weeks before you get to sell them), you will lose over £900 and might feel it was just better to have got rid of them this week and paid the tax.

The tax calc is a bit different if the gain would push you into being a higher rate taxpayer in which case the CGT rate is 20% of your profits instead of 10% and a bigger tax cost from selling them all now ; in which case you have a bigger 'margin of safety' before it becomes a bad decision to wait until April while risking a further price slump.

I think I'm going to sell half in the next month so I have a definite sum of cash. I will see in April how the remaining shares are performing and decide then. It is a gamble but I'm trying not to be too optimistic or pessimistic.

I just hope they stay at the £15 mark or improve. Some of the financial articles around them seem positive regarding them improving. I hope they are correct.