Tax on sale of shares.

Nigh

The private company I work for is anticipating receiving an offer to buy the company outright. I own shares in the company which will have to be sold as part of the deal. I'm wondering how this lump sum will be treated for tax purposes. Currently I earn about £40k/year but because I am past retirement age, I also receive the state pension of about £12.5k/year. All of that state pension goes into my company pension scheme with tax reclaimed by scheme managers. If the sale goes through, my shares will be worth around £20k. Does anyone know how much tax I will pay on this?

Sibbers123

It depends on the base cost of the shares (where they employment related securities) and whether the conditions for business asset disposal relief are met.

Nigh

Thanks for your comment, so, not a simple answer then?

molerat

https://www.gov.uk/tax-sell-shares

Jeremy535897

molerat said:

https://www.gov.uk/tax-sell-shares

It can be much more complicated where, as in this case, the shares are owned by an employee of the company being sold.

Sibbers123

Nigh said:

Thanks for your comment, so, not a simple answer then?

No,
The CGT bill won't be massive though. worst case scenario you are looking at £1,540 if you have no other gains in the tax year.

Jeremy535897

Sibbers123 said:

Nigh said:

Thanks for your comment, so, not a simple answer then?

No,
The CGT bill won't be massive though. worst case scenario you are looking at £1,540 if you have no other gains in the tax year.

It depends on the base cost, whether business asset disposal relief applies (see https://www.gov.uk/business-asset-disposal-relief ), and whether the gain could be regarded as income for tax purposes. There is not enough information to gave an answer beyond "somewhere between nil and £8,000 tax".

Nigh

Jeremy535897 said:

Sibbers123 said:

Nigh said:

Thanks for your comment, so, not a simple answer then?

No,
The CGT bill won't be massive though. worst case scenario you are looking at £1,540 if you have no other gains in the tax year.

It depends on the base cost, whether business asset disposal relief applies (see https://www.gov.uk/business-asset-disposal-relief ), and whether the gain could be regarded as income for tax purposes. There is not enough information to gave an answer beyond "somewhere between nil and £8,000 tax".

Jeremy, thanks for the link. There are lots of 'ifs' & 'buts' but, as far as I can see, worst case would be 20% tax.

Jeremy535897

Nigh said:

Jeremy535897 said:

Sibbers123 said:

Nigh said:

Thanks for your comment, so, not a simple answer then?

No,
The CGT bill won't be massive though. worst case scenario you are looking at £1,540 if you have no other gains in the tax year.

It depends on the base cost, whether business asset disposal relief applies (see https://www.gov.uk/business-asset-disposal-relief ), and whether the gain could be regarded as income for tax purposes. There is not enough information to gave an answer beyond "somewhere between nil and £8,000 tax".

Jeremy, thanks for the link. There are lots of 'ifs' & 'buts' but, as far as I can see, worst case would be 20% tax.

Assuming it is not subject to income tax at the higher rate (your other income may bring you into the 40% band).

Nigh

Just a footnote. The sale finally completed just before Xmas, the final price was just over £25k. Using the calculator suggested by molerat, the capital gains I need to pay on the profit will be just over £1200. Thanks to everyone for their contributions.