Capital gains tax

s4uch1e

For the last 3years ive been paying into my American owned employers share issue, as of july 1st i can cash them in.
Over the 3 year  ive paid in £12,600 (£350/month) and right now im looking at at good profit around £14,000
Im lead too believe under capital gains tax your allowed £12,300 profit .
Does this apply as ive been paying in over 3yrs and if it does , is it only the figure over the £12,300 you pay tax on or is it all the profits?
Thanx

bowlhead99

The way it works is that the first £12300 of gains you make in any tax year is exempt And gains after that are taxed, until the next tax year when you get a new annual exemption.  A gain is when you sell the shares for more than you paid for them. It doesn't matter when you paid for them, the date is when you sell them.

So if in July you sell shares for £26600 which had cost £12600, the gain is £14000, but first £12300 of the gain is exempt, so only £1700 is taxable, which is not a huge amount of tax to pay at 10% or 20% depending on your tax band.

What you might consider doing if you have £26600-worth of shares is only selling some of them.  So for example if you kept £4000 worth of shares aside, and only sold £22600 worth. Then you would have only sold 85% of the shares, so you would only make 85% of the gain you were going to make, which is just under £12k and fully exempt.  The remaining shares could be sold next tax year when you have another annual exemption available.  Of course, if the share price crashes hard, it may have been better to pay the tax and cash them in now.

If it's an HMRC-approved sharesave scheme or share incentive plan (SIP), you could transfer some of the shares directly into an  S&S ISA (if you have enough current-year ISA allowance left) where they could be sold without any tax consequences at all. But that's only available for certain HMRC approved schemes, and if they are shares in a foreign parent company it's often the case that the scheme doesn't qualify to do that. 

s4uch1e

Bowlhead99 , thanks for taking the time to explain my options.  If its only taxable after the allowance im happy with that, one quick question if ok
Do i need to do anything or will hmrc deal with it automatically??

bowlhead99

If you have made a gain that's not fully exempt, you will need to tell HMRC and give them the calculation so you can pay the tax.

You can either report gains as you make them during the year, using the real-time capital gains tax reporting service, and then you'll be sent a reference number so you can pay it off ; or you can do a self-assessment form after the tax year is finished by using the standard self-assessment process. Either way, you'll need to have paid any tax due by the January after the end of the April-April tax year in which you make the gain.  If you don't need to do a self-assessment for any other reason, it's probably easier just to use their real-time reporting service, but you will need to have done that by the December so that you can get the reference number through in time to pay it off by January.

 https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

TBC15

If you are subject to self assessment don’t you need to give details of sales over £40000 or so even if there is no tax liable?

AnotherJoe

TBC15 said:

If you are subject to self assessment don’t you need to give details of sales over £40000 or so even if there is no tax liable?

Yes, its either sales over 4x the limit, so i make that £49,200 OR a gain over the limit.

So if OP sticks to  KISS, and doesn't sell it all this tax year, then theres no need to report anything.

Ceme3000

Do you deduct the trading costs and any stamp duty from the share price gain when calculating the gain for CGT purposes? 
Edit: Found my answer! You do....
https://www.gov.uk/tax-sell-shares/work-out-your-gain