Tax on selling shares?

NUMPTY

Hi, I'm retired and know nothing about tax.


I have company shares worth around £55000 which I bought while working for a UK company. The shares were bought in a share match from the company over a 20 year period.


I have held these shares since I retired 10 years ago in a nominee account, so they are not in my name on the company shares register.



I earn 22,000 p.a.after tax. I would now like to sell some shares.



How much could I earn from selling these shares before having to pay any tax on them?


Thanks in advance,


Numpty

Keep_pedalling

You don’t pay income tax on sold shares, but you may have to pay capital gains tax if your gains exceed £12,000 for the year.

If your total gain exceeds your annual allowance you can avoid CGT by selling in batches across different financial years. The tricky thing is establishing your original purchase costs.

NUMPTY

Is this gains allowance on top of my income tax allowance? So can I sell £11000 worth of shares without paying tax?

AnotherJoe

You can sell a value of shares equivalent to a gain of less than £12,001 before you have to pay tax.
As said the tricky thing, over 20 years, is working out what the average cost of these shares is as that is teh basis on which the cost is worked out and thus the gain.

If the shares were 1p each you could sell £12k in each tax year going forward without paying tax or having to declare any capital gains.
And yes its an entirely separate allowance to your income tax allowance.

NUMPTY

AnotherJoe wrote: »

You can sell a value of shares equivalent to a gain of less than £12,001 before you have to pay tax.
As said the tricky thing, over 20 years, is working out what the average cost of these shares is as that is teh basis on which the cost is worked out and thus the gain.

If the shares were 1p each you could sell £12k in each tax year going forward without paying tax or having to declare any capital gains.
And yes its an entirely separate allowance to your income tax allowance.

Thank-you very much, I now understand where I stand regards my tax allowances>

tebthereb

Keep_pedalling wrote: »

You don’t pay income tax on sold shares, but you may have to pay capital gains tax if your gains exceed £12,000 for the year.

If your total gain exceeds your annual allowance you can avoid CGT by selling in batches across different financial years. The tricky thing is establishing your original purchase costs.

Isn’t there something to do with employment related securities that charge income tax on shares?

AnotherJoe

Yes but that is paid as income tax when you receive the shares, not when you sell them.
So say you are given shares worth £2 each for £1, then you have to pay income tax on £1 at that point, if they subsequently rise to £5 and you sell you pay CGT on the £3.
Back in the day (and maybe still) there were other complications to do with how the shares were gifted and so on that I dont recall but had the effect of lowering income tax at the time of receipt.
Bottom line, no income tax on the shares when you sell them years later.

tebthereb

I think that assumes they are not restricted securities, which is a debatable point in many cases.

If the securities are restricted then without a s431 election there is a chargeable event on disposal with income tax consequences depending on the amount paid on acquisition.

I think the OP should take proper advice. It’s a complex area.