C.G.T & Company Shares

Dutton10

Hello

so since the budget was announced that capital gains tax is decreasing to £6k then £3k. It has caused some concern at work.

we work for a big company which has 2 different types of share plans. In one pot you have Sips (share incentive plan, buy 2 shares & get 1 free), also in this pot are freeshares which the company gift us depending on how the company has performed. if you keep these shares for 5 years you can sell them without getting income tax and national insurance.

In the other pot we have sharesaves ( 3 or 5 year schemes, where you get to buy shares at a 25% discount ), once the scheme has ended you can keep them in a sharestore and sell at a later date, again free of income tax and national insurance.

It is a little confusing and not sure if we have to pay CGT on any/part of shares, ive tried to do a little research and also went to a financial advisor (he didn't seem to clued up on it to be honest) so next step is to ask you clever people

thanks for taking the time to read my post 

EthicsGradient

I have never had to deal with this myself (the closest I got were company share options that became worthless before they told me they'd awarded them to me, and remained that way until I left the company), but it looks like it may matter if you started this before 1 Dec 2016 (and then on the amount you have): https://www.rossmartin.co.uk/employers/benefits-shares/1079-employee-owner-status

I also see HMRC thinks the company should provide advice:

"When you become an employee shareholder your employer must pay for an independent expert to give advice about the terms and effects of the employee shareholder agreement. This advice not count as a taxable benefit."

https://www.gov.uk/tax-employee-share-schemes/employee-shareholder-shares

jaypers

You purchase the shares when the scheme matures. CGT is calculated against profit made and it’s no different on shares purchased as part of a Company Sharesave Scheme or if you just bought the shares on the Market. If you buy them at £1 and sell 10000 shares at £2, net proceeds are £20k. Profit is £10k (less charges etc). My recommendation would be to exercise any option into a nominee or Broker a/c and be careful how much you liquidate, obviously spreading over different tax years if you start to breach the CGT allowance. 

I’ve simplified this quite a bit. The GOV website has calculators and goes into detail. 

JamTomorrow

darrengribbin said:

Hello

so since the budget was announced that capital gains tax is decreasing to £6k then £3k. It has caused some concern at work.

we work for a big company which has 2 different types of share plans. In one pot you have Sips (share incentive plan, buy 2 shares & get 1 free), also in this pot are freeshares which the company gift us depending on how the company has performed. if you keep these shares for 5 years you can sell them without getting income tax and national insurance.

In the other pot we have sharesaves ( 3 or 5 year schemes, where you get to buy shares at a 25% discount ), once the scheme has ended you can keep them in a sharestore and sell at a later date, again free of income tax and national insurance.

It is a little confusing and not sure if we have to pay CGT on any/part of shares, ive tried to do a little research and also went to a financial advisor (he didn't seem to clued up on it to be honest) so next step is to ask you clever people

thanks for taking the time to read my post 

My understanding, and the basis I am working on for my own schemes is that for SIPs then as long as they are held within the plan and sold from that plan, then they stay free of CGT.  My company scheme is administered through Equiniti and I spoke with someone there who confirmed CGT is not aplicable if held and sold from within the scheme.  This would also align with the gov link below :

https://www.gov.uk/tax-employee-share-schemes/share-incentive-plans-sips

For sharesave schemes, or SAYE as they are known where I work, then CGT arises on these.  My non-earning spouse has been good for transferring to and selling these when I have used my CGT allowance.  This will be my strategy in the future.

eskbanker

EthicsGradient said:

HMRC said:

"This advice not count as a taxable benefit."

Top quality proofreading there! 🙄

jaypers

Should have said in my post, apologies……’Sharepurchase’ as opposed to SAYE are free of any CGT if they are sold from within the scheme. As soon as you move any shares out, those shares become liable under CGT rules. 

Dutton10

i managed to find some very useful documents on the shares website, it states as most of yous have said that the SIP's are free from CGT aslong as they stay within the scheme.

on the otherhand sharepurchase/SAYE scheme is subject to CGT, according to the financial advisor there is a workaround for this. if you take the shares out of the scheme within the 90 days of it finishing and put them into an ISA (£20,000 limit per year) then you can take them out the ISA, CGT free.

Vortigern

JamTomorrow said:

darrengribbin said:

Hello

so since the budget was announced that capital gains tax is decreasing to £6k then £3k. It has caused some concern at work.

we work for a big company which has 2 different types of share plans. In one pot you have Sips (share incentive plan, buy 2 shares & get 1 free), also in this pot are freeshares which the company gift us depending on how the company has performed. if you keep these shares for 5 years you can sell them without getting income tax and national insurance.

In the other pot we have sharesaves ( 3 or 5 year schemes, where you get to buy shares at a 25% discount ), once the scheme has ended you can keep them in a sharestore and sell at a later date, again free of income tax and national insurance.

It is a little confusing and not sure if we have to pay CGT on any/part of shares, ive tried to do a little research and also went to a financial advisor (he didn't seem to clued up on it to be honest) so next step is to ask you clever people

thanks for taking the time to read my post 

My understanding, and the basis I am working on for my own schemes is that for SIPs then as long as they are held within the plan and sold from that plan, then they stay free of CGT.  My company scheme is administered through Equiniti and I spoke with someone there who confirmed CGT is not aplicable if held and sold from within the scheme.  This would also align with the gov link below :

https://www.gov.uk/tax-employee-share-schemes/share-incentive-plans-sips

For sharesave schemes, or SAYE as they are known where I work, then CGT arises on these.  My non-earning spouse has been good for transferring to and selling these when I have used my CGT allowance.  This will be my strategy in the future.

I agree with JamTomorrow, that the SIP shares are free from CGT as long as they stay within the plan, or are sold from the plan.

CGT can be avoided on the SAYE shares by transferring to an ISA shortly after buying them, by transferring some shares to a spouse, and by selling in tranches across two tax years.