Couple of questions about Employee Share Purchase Plan

camden_kid

I have enrolled in the company Employee Share Purchase Plan (ESPP) and I am thinking of selling some or all of the current shares.

(1) The GOV.UK page on "Transferring your shares to an ISA" says:

You won’t have to pay Capital Gains Tax on any gains you make on your shares if you move them to an ISA.

You must transfer your shares to your ISA within 90 days of when you took out your SIP or SAYE shares.

Can I sell the shares and put the money put into my bank account and then transfer that money to my Stocks & Shares ISA? Or is there some specific way in which I have to "move them"?

(2) Currently the "Disposition Type" of the shares is Disqualifying. Which means - "A disqualifying disposition results in ordinary income for tax purposes". What advantages would I have waiting for the type to no longer be Disqualifying, which occurs after two years of the beginning of the offering period and one year of purchase"?

Edit: I've sent an email to "sharechemes@hmrc.gsi.gov.uk" with these questions but have been told I will get a response within 15 days.

jaybeetoo

Why do you want to transfer shares from an ESPP to an ISA?

What is the value of the shares?

Have you already contributed to an ISA this tax year? If so, how much?

camden_kid

jaybeetoo wrote: »

Why do you want to transfer shares from an ESPP to an ISA?

My question is mainly to understand what my options are but also I'm not confident about the shares performance in the long term. However, I do understand that they are offered to me at a bargain so I'm being careful.

I have contributed to both Cash and S&S ISAs this tax year but have room to put more in by the end of it.

EdSwippet

camden_kid wrote: »

(2) Currently the "Disposition Type" of the shares is Disqualifying. Which means - "A disqualifying disposition results in ordinary income for tax purposes".

US shares and/or US brokerage? The terminology here looks entirely American, so if these are stocks in a US corporation but you otherwise have no connection to the country -- do not and have not lived there, not an American citizen, and so on -- this particular marker on your brokerage account may be meaningless for UK tax purposes.

Is your ESPP scheme (also primarily American terminology) one of the UK tax-advantaged types, or not?

Paul_DNAP

camden_kid wrote: »

Can I sell the shares and put the money put into my bank account and then transfer that money to my Stocks & Shares ISA? Or is there some specific way in which I have to "move them"?

Essentially, no.


Selling them into your bank would be disposing of the shares, which CGT might be payable, and then putting the cash into a new S&S ISA will be a new investment.


The way to avoid/delay CGT is to keep the shares you have bought during the scheme as shares, but transfer them as shares into a S&S ISA using the appropriate method.
https://www.gov.uk/tax-employee-share-schemes/transferring-your-shares-to-an-isa

camden_kid

Paul_DNAP wrote: »

Essentially, no.


Selling them into your bank would be disposing of the shares, which CGT might be payable, and then putting the cash into a new S&S ISA will be a new investment.

That makes sense. Unfortunately I cannot transfer the shares to my S&S ISA provider as there is no way to do it. The only way I can see to do it is use the Hargreaves Lansdown S&S ISA (for example) and then transfer from that. However, I would only be able to do that after the end of this tax year as far as I understand it.

camden_kid

EdSwippet wrote: »

US shares and/or US brokerage? The terminology here looks entirely American, so if these are stocks in a US corporation but you otherwise have no connection to the country -- do not and have not lived there, not an American citizen, and so on -- this particular marker on your brokerage account may be meaningless for UK tax purposes.

It is a UK based company floated on NASDAQ.

EdSwippet wrote: »

Is your ESPP scheme (also primarily American terminology) one of the UK tax-advantaged types, or not?

It actually doesn't look like the ESPP falls under any of those categories. The closest one would be Company Share Option Plan but it is different to that.