Partnership shares from SIP and switching jobs

george4064

I’ve got about £10,000 in partnership shares held within a Share Incentive Plan, the first lot of shares reach their 5 year mark next month (Feb 2023) so so quite a few of the shares been held for 3 years but none yet held for the full 5 years. Unfortunately my employer doesn’t offer any free matching shares, I just simply buy £150 of stock each month from my pre-tax salary.

It’s likely I’m going to be switching job to another firm and I was wondering what happens with my shares held within the SIP?

Do I save on the NI for the partnership shares I’ve held in for 3 years or more?

If resign from my job, I assume that would make me a ‘bad’ leaver rather than a ‘good’ leaver?

Also, is there anything I can do to be pro active to reduce my tax bill here? Since I could potentially withdraw/sell some this tax year and some next tax year (CGT no issue for me as have full allowance, but thinking more income tax etc). My salary at the new job will be quite a bit higher and mean I’m firmly in the higher tax bracket, currently im just on the brink.

For clarification, my ultimate intention is to sell the shares and re-invest in diversified global equities.

Thanks in advance for all your help.

jaypers

If it falls under the same rules as my old company, everything is immediately released free of tax and NI if you leave for reasons such as redundancy or retirement. If you just resign, shares that you have purchased in the scheme that have not been held long enough to be free of taxes will mean you have to pay what you owe. I believe that they will sell enough to cover what you owe. The remaining shares are then yours to sell straight away, which will be free of any CGT if sold from within the scheme. You also have the option to transfer the shares to your own broker account. You usually have to sell or move the shares within 30 days of leaving. 

george4064

jaypers said:

If it falls under the same rules as my old company, everything is immediately released free of tax and NI if you leave for reasons such as redundancy or retirement. If you just resign, shares that you have purchased in the scheme that have not been held long enough to be free of taxes will mean you have to pay what you owe. I believe that they will sell enough to cover what you owe. The remaining shares are then yours to sell straight away, which will be free of any CGT if sold from within the scheme. You also have the option to transfer the shares to your own broker account. You usually have to sell or move the shares within 30 days of leaving. 

Thank you. Is the Income Tax and NI amounts based on my earnings in the tax year when I bought the shares or when I sell them?

If I transfer the shares to my own broker account (GIA) and sell them myself, will the registrar managing the SIP sell enough shares to cover my taxes and transfer out the remaining shares?

artyboy

george4064 said:

jaypers said:

If it falls under the same rules as my old company, everything is immediately released free of tax and NI if you leave for reasons such as redundancy or retirement. If you just resign, shares that you have purchased in the scheme that have not been held long enough to be free of taxes will mean you have to pay what you owe. I believe that they will sell enough to cover what you owe. The remaining shares are then yours to sell straight away, which will be free of any CGT if sold from within the scheme. You also have the option to transfer the shares to your own broker account. You usually have to sell or move the shares within 30 days of leaving. 

Thank you. Is the Income Tax and NI amounts based on my earnings in the tax year when I bought the shares or when I sell them?

If I transfer the shares to my own broker account (GIA) and sell them myself, will the registrar managing the SIP sell enough shares to cover my taxes and transfer out the remaining shares?

You pay the appropriate rate of tax/NI for the year that you sell them. Which is one reason I find SIP to be a very useful scheme for anyone that is approaching retirement and might want to sell down early to provide income in their first year out of work... of course CGT would still apply if you didn't first transfer the shares to an ISA before selling

george4064

artyboy said:

george4064 said:

jaypers said:

If it falls under the same rules as my old company, everything is immediately released free of tax and NI if you leave for reasons such as redundancy or retirement. If you just resign, shares that you have purchased in the scheme that have not been held long enough to be free of taxes will mean you have to pay what you owe. I believe that they will sell enough to cover what you owe. The remaining shares are then yours to sell straight away, which will be free of any CGT if sold from within the scheme. You also have the option to transfer the shares to your own broker account. You usually have to sell or move the shares within 30 days of leaving. 

Thank you. Is the Income Tax and NI amounts based on my earnings in the tax year when I bought the shares or when I sell them?

If I transfer the shares to my own broker account (GIA) and sell them myself, will the registrar managing the SIP sell enough shares to cover my taxes and transfer out the remaining shares?

You pay the appropriate rate of tax/NI for the year that you sell them. Which is one reason I find SIP to be a very useful scheme for anyone that is approaching retirement and might want to sell down early to provide income in their first year out of work... of course CGT would still apply if you didn't first transfer the shares to an ISA before selling

Thank you.

Since my new job’s salary and bonus will easily put me into higher rate bracket vs current job where I’m on the periphery it would make sense to make sure I pay the tax owed during the current tax year rather than next year’s.