Transfer from Company SIP to S&S ISA(or not)

midlifecrisis

Hi
I have just transferred companies and have 90 days to move shares from my previous employers' Share Incentive Plan otherwise they will sell them and forward the proceeds to me.

I thought the rules had changed and I could now transfer directly into a S&S ISA rather than sell/repurchase? It's proving difficult to get the correct info as my broker says it can be done with a letter of entitlement but my previous employers share administrator won't issue it saying it's a global scheme and not HMRC approved.

Who is right? Total share value is approx £18k. Anyone have experience of this? Thanks

dunstonh

I thought the rules had changed and I could now transfer directly into a S&S ISA rather than sell/repurchase?

No.

You can use in-specie transfers between the same wrapper but moving it from a pension to an ISA would require you to be over the age of 55 and subject to tax on the lump sum drawn and the other consequences that go with it.

In most cases, it wouldn't be good advice to move from a pension to an ISA as, whilst the money is in the pension, it is more tax-free than the ISA.       

midlifecrisis

dunstonh said:

I thought the rules had changed and I could now transfer directly into a S&S ISA rather than sell/repurchase?

No.

You can use in-specie transfers between the same wrapper but moving it from a pension to an ISA would require you to be over the age of 55 and subject to tax on the lump sum drawn and the other consequences that go with it.

In most cases, it wouldn't be good advice to move from a pension to an ISA as, whilst the money is in the pension, it is more tax-free than the ISA.       

Thanks for the reply. This isn't a pension transfer. It's a transfer of shares out of a company Share Incentive Plan. I just thought I could transfer the shares into my S&S ISA 

badger09

dunstonh said:

I thought the rules had changed and I could now transfer directly into a S&S ISA rather than sell/repurchase?

No.

You can use in-specie transfers between the same wrapper but moving it from a pension to an ISA would require you to be over the age of 55 and subject to tax on the lump sum drawn and the other consequences that go with it.

In most cases, it wouldn't be good advice to move from a pension to an ISA as, whilst the money is in the pension, it is more tax-free than the ISA.       

@dunstonh

I think that like me, you added an extra 'P' to OP's SIP. He is asking about Share Incentive Plan, rather than Self Invested Personal Pension

badger09

@ midlifecrisis
Rules are here
https://www.gov.uk/tax-employee-share-schemes/transferring-your-shares-to-an-isa

Sorry, probably doesn't help your specific problem. I don't know the answer & won't guess. Hopefully someone with requisite knowledge will be along shortly

bowlhead99

Amidlifecrisis said:

Hi
I have just transferred companies and have 90 days to move shares from my previous employers' Share Incentive Plan otherwise they will sell them and forward the proceeds to me.

I thought the rules had changed and I could now transfer directly into a S&S ISA rather than sell/repurchase? It's proving difficult to get the correct info as my broker says it can be done with a letter of entitlement but my previous employers share administrator won't issue it saying it's a global scheme and not HMRC approved.

Who is right? Total share value is approx £18k. Anyone have experience of this? Thanks

You're right that there is a general rule about taking shares out of approved share schemes and moving them directly into an ISA (subject to having enough annual subscription allowance), where they can be held or sold without tax consequences.

However, all incentive schemes are not created equal, and so don't always qualify for this 'move the shares into an ISA before selling them and avoid CGT' treatment.

That's only available for employees who acquire shares from a HMRC approved (tax-advantaged) all-employee share scheme - i.e. Approved Profit Sharing scheme, SAYE Share Option Scheme, or Share Incentive Plan.  ISA managers can't accept shares from tax-advantaged discretionary share option schemes that all employees of the company don't get to participate in (i.e. Company Share Option Plans and Enterprise Management Incentives are not open to all, so can't qualify), and similarly they can't accept them from various global/international schemes which are not approved by HMRC.

In your case, if the scheme administrator is telling you that they can't give you an official letter of entitlement for a quantity of share entitlements maturing under an HMRC approved scheme because it isn't one, you seem to have your answer. Badger's link above may help clarify, but it's important to recognise that there may be a difference between what HMRC call an approved Share Incentive Plan, and what your former employer happens to call their incentivisation scheme - i.e. also known internally as a 'Share Incentive Plan', but not something approved under the HMRC rules and not qualifying for a cheeky transfer into an ISA for a tax free sale.

As an aside, the capital gains tax annual exemption for 2020/21 covers the first £12300 of capital gains you make this year, so if the proceeds of the share sale is only £18k and your deemed cost of acquiring those shares is more than £5.7k, you might not have any taxable gains in excess of the exemption - so no tax to pay on a normal sale anyway. So you could sell, get the cash, and buy some or all of them back inside an ISA if you really wanted them.

dunstonh

badger09 said:

dunstonh said:

I thought the rules had changed and I could now transfer directly into a S&S ISA rather than sell/repurchase?

No.

You can use in-specie transfers between the same wrapper but moving it from a pension to an ISA would require you to be over the age of 55 and subject to tax on the lump sum drawn and the other consequences that go with it.

In most cases, it wouldn't be good advice to move from a pension to an ISA as, whilst the money is in the pension, it is more tax-free than the ISA.       

@dunstonh

I think that like me, you added an extra 'P' to OP's SIP. He is asking about Share Incentive Plan, rather than Self Invested Personal Pension

I think the post has been edited to make it clear its a Share Incentive Plan. I swear I saw SIPP earlier.     Either way, it is clear now what it is and Bowlhead has got it covered.  

midlifecrisis

Thanks for the advice.👍

eskbanker

dunstonh said:
I think the post has been edited to make it clear its a Share Incentive Plan. I swear I saw SIPP earlier. 

No - for what it's worth (not much in the context of the main subject at hand!) it's no longer possible to edit posts without the timestamp being updated, so the lack of this in post #1 signifies no editing.  On the old forum you could jump back in and correct typos, etc, within the first minute or two, and the timestamp would be left unadjusted, but this is no longer possible, which feels like a backward step but at least provides total transparency....

ColdIron

eskbanker said:

On the old forum you could jump back in and correct typos, etc, within the first minute or two, and the timestamp would be left unadjusted

A feature I greatly miss as I am much better at spotting typos after I post than when I proof read

dunstonh

Well, that must make me guilty of headline focusing. and skipping the first paragraph.  Silly mistake on my part.