How do I calculate tax on shares?

Jemma01

Thanks for dropping by!
I have accumulated monthly shares for 3.5 years as part of my employer's SPP. I'm unsure how much tax (if any) I need to pay after I sell.

• My current understanding is that if I gain more than £2K of profit per annum, I have to pay a tax. Is this correct?
• If I put in 1% of my salary, my company doubles it. And I think my company's input is also taxable.
• I currently pay 40% tax on my income.
• Now, these shares were acquired at a different time, and the value of each share is different. I'm unsure how to work out what the gain is. The figure below shows few of the shares and when the transaction had taken place, it shows the 'Amount' (including 50% paid by my company), 'Share price' how much it was, 'Transaction Shares' how many were purchased, 'if sold at 78.4201' calculates what I would have gained if I sold the shares on Jan 4th (excluding any fee I may need to pay), then the last two columns: (1) what I would have gained from each share including my company's contribution, and (2) without my company's contribution.

My questions are

1. First have I calculated this correctly? If not, how should this be done to work out how much tax I need to pay?
2. Assuming the calculation is correct, If I only sell 20 of the shares, how do I work out what the profit is? If I sell them all, it isn't a problem, but part of them I'm struggling to imagine! Part of me thinks I've over complicated it 😁

This assumes no fees to pay and nothing, just based on the numbers.
Thanks

Sorcerer2018

First off Capital Gains tax limit is currently £12,000, so you need to make over £12,000 to pay. So I think you are fine, you don't even need to declare it, as long as you fall below this limit.

Sorcerer2018

The 2K limit is for dividend income and is a separate thing.

Jemma01

Sorcerer2018 said:

First off Capital Gains tax limit is currently £12,000, so you need to make over £12,000 to pay. So I think you are fine, you don't even need to declare it, as long as you fall below this limit.

Ah, right! It is around 9K with my company's contribution, so well within limit.
Thanks, I mixed up the tax with something else then... finance is my nemesis 😁

eskbanker

Worth spending time reading the brochure for your employer's scheme as these are often set up in a tax-efficient way anyway, as per https://www.gov.uk/tax-employee-share-schemes

https://www.gov.uk/capital-gains-tax and https://www.gov.uk/tax-sell-shares are also useful overviews of taxation in this area, if applicable....

ChilliBob

Yeah as said above the type of scheme is important here from a tax perspective. They're all quite different in their treatment of tax and other bits, usallly all in a good way though! 

lindabea

Sorcerer2018 said:

First off Capital Gains tax limit is currently £12,000, so you need to make over £12,000 to pay. So I think you are fine, you don't even need to declare it, as long as you fall below this limit.

Just for the sake of accuracy, the annual CGT allowance is £12300 not £12000

Jemma01

Thanks peeps for helping me save my pennies 😁👍

eskbanker said:

Worth spending time reading the brochure for your employer's scheme as these are often set up in a tax-efficient way anyway, as per https : // www.gov.uk/tax-employee-share-schemes

https : // www.gov.uk/capital-gains-tax and https : // www.gov.uk/tax-sell-shares are also useful overviews of taxation in this area, if applicable....

Thanks for your help, on the last link, i had tried to use the calculator earlier in the month, but when it asked me "How much did you pay for the shares", i stopped there and that's where this post  was born from, because for the 20 shares I want to sell, i can't specify which of the shares they should be be selling (in other words, i can't say sell by oldest first, or maybe that's what they do?) so I never really understood how to workout the tax amount to see whether i hit the limit or not. 😫

I'll dig out the paper work to find out what type of scheme it is, i hope it is tax efficient

eskbanker

Jemma01 said:

Thanks for your help, on the last link, i had tried to use the calculator earlier in the month, but when it asked me "How much did you pay for the shares", i stopped there and that's where this post  was born from, because for the 20 shares I want to sell, i can't specify which of the shares they should be be selling (in other words, i can't say sell by oldest first, or maybe that's what they do?) so I never really understood how to workout the tax amount to see whether i hit the limit or not. 😫

For tax purposes, you're not selling specific shares such as the first 20 or whatever, you're simply selling 20 shares whose value is the average, i.e. total price paid divided by total number of shares.  You need to adapt your spreadsheet to maintain your average price paid per share (basically sum of column D over sum of column F), ensuring that this is kept up to date after every purchase.

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

noitsnotme

Jemma01 said:

Thanks peeps for helping me save my pennies 😁👍

eskbanker said:

Worth spending time reading the brochure for your employer's scheme as these are often set up in a tax-efficient way anyway, as per https : // www.gov.uk/tax-employee-share-schemes

https : // www.gov.uk/capital-gains-tax and https : // www.gov.uk/tax-sell-shares are also useful overviews of taxation in this area, if applicable....

Thanks for your help, on the last link, i had tried to use the calculator earlier in the month, but when it asked me "How much did you pay for the shares", i stopped there and that's where this post  was born from, because for the 20 shares I want to sell, i can't specify which of the shares they should be be selling (in other words, i can't say sell by oldest first, or maybe that's what they do?) so I never really understood how to workout the tax amount to see whether i hit the limit or not. 😫

I'll dig out the paper work to find out what type of scheme it is, i hope it is tax efficient

There are basic rules to determine which shares you sell first.  See ‘matching rules for disposals’ here - https://www.att.org.uk/shares-securities-cgt-aspects

However I’m not sure if them being in an employee share scheme changes any of that.

Jemma01

eskbanker said:

Jemma01 said:

Thanks for your help, on the last link, i had tried to use the calculator earlier in the month, but when it asked me "How much did you pay for the shares", i stopped there and that's where this post  was born from, because for the 20 shares I want to sell, i can't specify which of the shares they should be be selling (in other words, i can't say sell by oldest first, or maybe that's what they do?) so I never really understood how to workout the tax amount to see whether i hit the limit or not. 😫

For tax purposes, you're not selling specific shares such as the first 20 or whatever, you're simply selling 20 shares whose value is the average, i.e. total price paid divided by total number of shares.  You need to adapt your spreadsheet to maintain your average price paid per share (basically sum of column D over sum of column F), ensuring that this is kept up to date after every purchase.

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

I honestly can't express how grateful I am for this response, the lights just went off in my head 🏆🎁, thank you so much