Save as you earn scheme: most tax efficient option at maturity?

ELM_Herts

I've been putting £500 a month into my company's SAYE scheme for the past three years and it's just come to maturity. Amazingly the £18,000 I put in will be worth around £60,000. They've sent us some options, but I'm a bit unclear on them and the company managing it won't give us any clear answers re: tax burden and keep telling me to speak to my financial advisor (I don't have one!).

As far as I can see, the best option is to put as much as possible into an ISA, and if I wait until February, I'm apparently able to straddle two years' tax allowance, meaning I could put away £40k in ISAs. My question there is am I able to cash them in straight away without any kind of tax impact?

My other question is around what happens with the remaining £20k. I understand it gets transferred into shares. I know the cap per year to avoid CGT is £12,000, but what about the £18,000 that is my own original investment? Does that count towards the capital gains tax allowance or not? What I'm thinking is that I could immediately cash in the £20k remaining in shares and £18k of that would not be eligible for CGT since it's my money - only the remaining £2k would count.

So basically what I want to do is put £20k in shares, £40k in the ISA and take the whole lot out in the next financial year. Am I correct in thinking that I will avoid any tax burden by doing it that way?

Apologies if that was a little long-winded and thank you very much in advance!

Vortigern

https://forums.moneysavingexpert.com/showpost.php?p=76310667&postcount=5

Above post has similar figures. Just needs slight adjustment.

To clarify. You will first take your whole sharesave entitlement as shares. Do this fewer than 90 days before the end of the tax year.

You transfer £20,000 worth of shares into a S&S ISA in the current tax year.
You can sell these immediately with no tax liability.

You transfer £20,000 worth of shares into a S&S ISA next tax year.
You can sell those immediately with no tax liability.

[STRIKE]You can sell the remaining £20,000 worth of shares whenever you like. The CGT on these will be covered by your CGT allowance.[/STRIKE]

The remaining £20,000 worth of shares cost £6,000 from the savings scheme so you have a gain of £14,000

You could sell some this tax year and some next tax year to avoid CGT - or you could give some to your spouse to make use of his/her CGT allowance.

Edited as corrected in eskbanker's post below.

eskbanker

Vortigern wrote: »

You can sell the remaining £20,000 worth of shares whenever you like. The CGT on these will be covered by your CGT allowance.

The sale of this tranche would also need to be over two tax years to avoid CGT, as the gain (from the original acquisition cost of £6K, not the £18K OP suggests) would be £14K, i.e. exceeding the annual CGT allowance.

ELM_Herts

Thank you both so much for the swift reply - that makes perfect sense!