CGT on shares from employment

Equaliser12345

Hi.

I've just found out that my employer is being acquired and various employee share schemes and long term incentive programmes will be paying out.

On shares that I own, I understand that I will be able to use my CGT annual allowance.  I will be paying income tax on the LTIPs that are advanced.

I propose gifting shares that I already own to my wife in order to use her CGT allowance.  I have 2 children but, as I understand it, I am not able to gift them any shares.

I don't think there are any other tax savings that I can make but wonder if anyone has any other ideas?

Thanks!

Equaliser12345

One thing I did think of was transferring to my stock ISA and/or SIPP.

However, I think the gain would be crystallised BEFORE they went into the ISA/SIPP thereby not really helping.

Jeremy535897

If the company is a private company, there maybe restrictions on share transfers, even to spouses or SIPPs. Have you checked?

If you sell the shares and contribute the proceeds to a SIPP, this will extend your basic rate for income tax (subject to the detailed rules), and may therefore affect the rate of capital gains tax you pay. You should never transfer shares to a SIPP because that will not extend the basic rate but will crystallise the gain. There is no tax benefit in using an ISA, either as a transfer vehicle, or to invest the proceeds, other than any future gains will be free of capital gains tax.

Do the shares qualify for BADR?
https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-business-asset-disposal-relief-2021

Equaliser12345

Jeremy535897 said:

If the company is a private company, there maybe restrictions on share transfers, even to spouses or SIPPs. Have you checked?

If you sell the shares and contribute the proceeds to a SIPP, this will extend your basic rate for income tax (subject to the detailed rules), and may therefore affect the rate of capital gains tax you pay. You should never transfer shares to a SIPP because that will not extend the basic rate but will crystallise the gain. There is no tax benefit in using an ISA, either as a transfer vehicle, or to invest the proceeds, other than any future gains will be free of capital gains tax.

Do the shares qualify for BADR?
https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-business-asset-disposal-relief-2021

Thanks for that. All good points.  The shares are listed (NYSE).  I think I will certainly be using some of the proceeds to contribute to my SIPP.