Company shares award

gab3x

Hi, I am really not good with this so need your help.

I am starting to get annual share awards from my company. It's a Wall Street listed Global company so awards are done in US via Fidelity system. Upon vesting 50% of stock is set aside for paying tax. I have £20k in it so far. I am planning to leave it all in there until retirement, I am mid forties so should amass into a good pot by the time I hit retirement age.

The question is can I somehow avoid paying tax on this when they vest by somehow putting them into an ISA? Maybe I should rephrase this question and ask - what is the most tax efficient way of managing this?

Thanks

NottinghamKnight

The most tax efficient method is not to leave it accrue to a massive amount and take in one hit. Tax treatment will be dependent on the way the scheme is set up and how that is applied to both us and uk tax environments. In general assuming no other tax advantageous strategy then realising each year to make use of cgt allowance is worthwhile (gifting to partner if applicable), though depends whether this would be treated as income. Contributions into pension will gain tax relief and be in a tax sheltered environment. The other major point is that even huge multinationals underperform and may go bust, look at Enron etc, so most people with a reasonable risk profile would sell individual stocks and invest into more diversified funds, especially when their employment income is reliant on the same company. 

Notepad_Phil

gab3x said:

I am starting to get annual share awards from my company. It's a Wall Street listed Global company so awards are done in US via Fidelity system. Upon vesting 50% of stock is set aside for paying tax. I have £20k in it so far. I am planning to leave it all in there until retirement, I am mid forties so should amass into a good pot by the time I hit retirement age.

Back in the mid-80's to mid 90's myself and many of my colleagues were in receipt of share awards from a Wall Street listed Global company. Many of my colleagues did the same as you, kept all the shares and saw their paper fortunes rise and rise and make plans on how to spend their profits when they retired, unfortunately their good fortune did not continue and the company went into sudden decline, made a good portion of the workforce redundant and were eventually taken over. So to add to the misfortune of many people losing most of what they had saved up over a decade or more, they also lost their high-paying employer.

Now I'm not saying that will happen to you, but you may want to diversify your investments so that as the shares vest you sell at least some of them and put that into other investments/savings.

With regards to holding them in an ISA, that is possible but you will probably have to sell them and then buy them on the ISA platform that you choose to hold them on (making sure of course that you can buy your US shares on that platform).

gab3x

Hi @NottinghamKnight and @Notepad_Phil - you both gave me some food for thought re diversification and also gifting to my husb who is not even over his annual tax free income allowance.
So I first gift vested shares, which he then sells and buys other shares through ISA?

Username999

Sell them as soon as you can IMHO. 

kinger101

Echo what everyone else is saying. Sell them as soon as possible and buy a diversified portfolio inside a tax wrapper.  Pension would be the most efficient.