CGT avoidance - transferring ownership of shares to spouse

olip74

Hi,

I'm in the fortunate position of having two share option schemes maturing this year that will, as long as the share price doesn't collapse, deliver a good return between them. However due to the CGT changes coming in April, if I sell both sets of shares it would created a CGT liability. I know that, in theory, I can use my wife's CGT allowance to boost our allowance but I understand that, in order to do this, I need to transfer some of the shares to her ownership. I've asked my company HR and I've asked the adminstrator of the scheme if they can do this for me and they have said 'no'.
An alternative would be to sell the shares from within an ISA wrapper. The scheme administrator says I can transfer the shares into an ISA (within 6 months) but my ISA administrator says they can't accept them (their own policy).

So, what is the best way to proceed? I know nothing about buying and selling shares. Can I change the ownership simply by setting up a broker account for my wife and transferring some in there? Does anyone know of ISA providers who will accept the transfer of such shares into an ISA? In theory it's simple but the practicalities are just proving difficult! TiA.

eskbanker

Who's your current ISA provider and what are the shares?  I'd have thought that most full-market ISA managers should support mainstream shares....

Jeremy535897

There is nothing stopping you having a different stocks and shares ISA for these shares, but remember that the value of the shares counts towards your annual £20,000 ISA limit. The time limit for putting them in the ISA is 90 days not six months. You may also be able to transfer them into a pension scheme.

olip74

I also invest in BAYE and will have further option schemes maturing in future years so I want to sell the shares when the schemes mature around December and minimise my exposure to my firm. Also the CGT allowance will decrease again in 2024. They're a FTSE 100 company so they're certainly mainstream shares.

I'm struggling to understand this 'ownership' aspect. My broker said I can transfer the shares to an ordinary account. Could I just transfer some into another account in my wife's name and sell them from there, would they be considered to be hers then?

Jeremy535897

If you transfer shares to your wife, she takes over your base cost. If transferring shares to your ordinary account does not involve crystallising a gain, there should then be nothing to stop you transferring shares to your wife.

olip74

As I understand it, when transferring between accounts the shares are momentarily sold by the originating broker, the cash is transferred, then they are repurchased by the new provider, is that correct? But am I also right to think that's not considered for CGT as you're not crystallising a sale of the shares?

Jeremy535897

I think the devil is in the detail. You and your wife should sit down with the broker and talk through what you want to achieve. Sometimes married couples actually want a disposal for tax but want to retain the shares, and a way round the bed and breakfast rules is for husband to sell the shares and wife to purchase the same number of shares at the same time as husband's sale. Brokers must therefore be well versed on structuring the arrangements to achieve the result you want.

areader

I'm in a similar position with SAYE schemes managed by Computershare on their EquatePlus platform. In my situation the first step is to transfer the shares away from EquatePlus into a general investment account held in my own name. Most (but perhaps not all) platforms will then have a process for you to transfer (or gift) some (or all) of the shares directly into an account held in your spouse's name. Neither of these transfers involve selling and repurchasing the shares and will not crystallise a capital gain (or loss).

There is a list of brokers at the bottom of this article https://www.moneysavingexpert.com/savings/investment-beginners/

In terms of transferring the SAYE shares into an ISA within 90 days, finding a platform that supports doing this will be a bit more difficult. Most brokers offer "Bed and ISA" which will sell the shares and repurchase them within the ISA, this will trigger a capital gain (or loss) which is what you are trying to avoid. After searching the internet, the only one I could find that clearly stated they supported an in-specie transfer of SAYE shares into an ISA within 90 days of acquisition was https://www.charles-stanley.co.uk/insights/commentary/transferring-saye-shares-isa

I'm not sure whether you'd first transfer the shares into one of their general investment accounts and then into an ISA, you'd need to contact them for more details. I've decided for the moment that trying to transfer the shares directly into an ISA is an unnecessary complication. This might change in the future with ever decreasing CGT allowances.

Another way to mitigate your CGT exposure would be to sell the shares in tranches across different tax years, this could be combined with transferring some to your spouse.

olip74

@areader thank you, that's cleared up some things for me. It's Computershare/EquatePlus I'm working with but I didn't know the shares could be transferred out directly. This year I can avoid CGT by simply gifting some shares to my wife to sell. I guess that would involve setting up two accounts and then closing them once the shares had been disposed of to avoid recurring fees but presumably there's nothing to stop me doing that?
I have taken successive share option schemes as they have become available so I'll probably look to sell the shares each year as the schemes mature. I also invest in BAYE so I have enough exposure to my company as it is!

areader

It would probably be simpler if you could find a platform that didn't have any setup fees, on-going fixed fees, inactivity fees, minimum balance requirements or service charges (etc!) to avoid opening and closing the accounts since you are also planning on using them for future years. Fairly sure that Fidelity and Hargreaves Lansdown (and undoubtedly others) do not charge any fees (other than dealing charges) for exchange-traded investments (e.g. shares, ETFs, investment trusts) held in their general investment accounts but you should confirm this yourself. You'll also need to make sure the platform allows gifting of shares to your spouse's account (e.g. Freetrade doesn't support this).

Transferring out of EquatePlus isn't the most obvious of processes but I've had no problems, you'll need to setup a "Brokerage account" in your "Financial details" section - they ask for name, address, CREST ID (for UK shares) and BIC. You then need to then submit a Transfer Transaction in EquatePlus and a corresponding transfer-in request from whatever platform you choose to use.

You didn't ask, but in respect of BAYE, these are what the government call Share Incentive Plans (SIPs) and shares held within them are not CGT liable when sold. Also, if the shares are dividend paying you might like to look into reinvesting the dividends within the SIP since if you hold the resulting shares for more than 3 years they will not be liable for dividend tax, the allowance on which is being reduced from £2000 (current tax year) to £1000 (next tax year) and then £500 (2024/25).

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

https://www.bdo.co.uk/en-gb/insights/tax/global-employer-services/share-incentive-plan