Do you get taxed on selling shares given to you by your employer?

icicat

Hey all,

The company I used to work for would award me shares every year. I'm in the process of selling my flat and the money from these shares would really help towards buying the next property.

I no longer work for the company and being based in the UK the shares are actually handled by a US stock firm. So just wondering if I decide to sell the shares, is there a certain amount I can have tax free for each tax year? I fill out a self assessment for my freelance work (aside my fulltime job) so would the shares need to be declared via that?

I've not had any experience with selling shares and dealing with the tax side of things, so any help and advice on this would be appreciated.

On-the-coast

Were the shares held in a uk gov recognised share saving scheme?
often the whole amount is shielded from tax in that case. 

If it’s “normally” held shares
then you can make a tax free gain of £12300 (in a tax year)

You will need to look up the value of the shares at time of award vs sale & adjust for currency changes to work out what your gain is (or loss…)

EdSwippet

RSUs? If yes, documented here:

Restricted Stock Units Explained! - Websters

icicat

Awesome, thanks guys. I'm not sure if they are in a uk gov saving scheme, they are managed by Fidelity which is a US company. When I look at the value it is shown in sterling so not sure if there are conversion fees on withdrawal. Ok thats not too bad then, I can draw out £12300 around now and then wait until after April for another £12300 and then keep the rest in there for a rainy day.

Thanks Ed, I will examine the link

bjorn_toby_wilde

My experience with a similar scheme is that Fidelity will charge a flat fee to wire transfer the money to your UK bank (not a massive fee - from memory about $25) but I was disappointed with their exchange rate. It usually isn’t as good as the normal headline exchange rates.

It would be worth checking that they are RSU’s and not stock options. I was given non-qualifying stock options as well and at exercise they were treated as income, subject to income tax and NI.

SkubaDoo

Hello all! I am new to the forum: I have read the FAQs, but I haven't found anything about "resurrecting" posts, so if I should open a post, please let me know and I'll delete this post and open a new one.

I read this thread as I find myself in a similar position.

The one thing I'm not too clear about is what is taxed if I sell the shares.

As an example, let's say I have USD 20,000 worth of shares, and I sell them all today. Let's also assume that the USD/GBP rate is 0.8.

Case A) Suppose that the total gain is USD 12,500 (meaning that I had been granted USD 7,500 worth of shares back in the day). Given the FX rate, the gain is equivalent to GBP 10,000.

If I understand it correctly, I should not pay any additional tax, as the gain is below the £12,300 threshold.

Is this correct?

Case Suppose that the total gain is USD 18,750 (meaning that I had been granted USD 1,250 worth of shares back in the day). Given the FX rate, the gain is equivalent to GBP 15,000.

In this case, I should pay some tax on GBP 2,700 (i.e. 15,000-12,300).

Is the rate at which I pay that tax my income tax?

EdSwippet

SkubaDoo said:

As an example, let's say I have USD 20,000 worth of shares, and I sell them all today. Let's also assume that the USD/GBP rate is 0.8.

There's not enough information in your post. You don't calculate the gain in USD and then convert that to GBP. What were these shares worth in GBP on the date that you acquired them?

You compute your GBP cost of USD shares by converting the cost in USD to GBP using the forex rate at date of purchase (or grant vesting, or whatever; that is, when you gained possession of them). Then, on sale, compute the GBP proceeds by converting the USD sale amount to GBP using the forex rate at date of sale. Subtract your GBP cost from your GBP proceeds to find your capital gain for UK tax purposes.

In practice, this means you can potentially even have a USD loss in these shares that miraculously nevertheless becomes a GBP taxable gain thanks purely to GBP weakness relative to the USD. (Or vice-versa.)

SkubaDoo

Thanks for clarifying. It's going to be interesting to find out that information.

It didn't even occur to me that I should convert both the cost and the proceeds to GBP. That's going to be fun to find out now...

Anyhow, in essence:

Taxable amount = (proceeds converted to GBP) - (cost converted to GBP) - (tax-free gain threshold)

Makes sense now. Thank you very much!

icicat

Hey guys, just resurrecting this old thread as I've not yet sold my shares, though buying a house I need to think about doing so soon.

Just to refresh I received shares from a tech company I worked at 5 years ago. They are Restricted Stock Units (RSU) shares. I have read the document Ed linked in the third post, though I'm still not understanding the tax side.

So I think the shares were vested at a total value of £3000 (approximately) Over the years they have grown to a total value of just under £32,000. So given these figures for example, makes it a profit of 29,000. So would this be taxed under capital gains tax? With RSU is any profit under 100k is capital gains only and not income tax?

Is there a threshold for how much capital gains you can acquire without having to pay capital gains tax? I'm wondering if it is best to sell an amount each year rather than the whole lot.

Jeremy535897

You presumably paid income tax on the value when they vested? Any gains above the value on vesting will be subject to capital gains tax. You compare the value in sterling at the vesting date with the sterling equivalent of the sale proceeds. Any gain above the annual exemption of £6,000 for 2023/24 (to the extent not used against other gains) will be taxable. The gain above the annual exemption will be charged at 10% if you are a basic rate taxpayer, up to the available basic rate band, then 20%. This is explained far better here:
https://www.gov.uk/capital-gains-tax/rates

Your question "With RSU is any profit under 100k is capital gains only and not income tax?" appears to be based on a misunderstanding of the article quoted in an earlier post. That is only relevant in respect of the income tax charge on vesting, where that income takes you above £100,000 adjusted net earnings.

icicat

Hey Jeremy, you know that's a good point, I'll need to check my payslips for that. So I should count the value after any tax deductions? I guess I need to sell the shares first before I can calculate all this. Ok thanks for clearing up the ,mis-understanding, I have more reading up to do