Employee Share Scheme CGT

Civvy21

Good afternoon,

My wife has some shares acquired through Employee Share Save schemes. All in they amount to just over £20k, and were acquired over about three or four different schemes. There should be some more shares due next year. 

I understand the CGT allowance is being reduced from April this year and again the following year. My question is how do you work out the "capital gain" for share save schemes? The share scheme exercise prices vary from year to year. 

Grateful for any advice. 

Thank you. 

Jeremy535897

It depends on the scheme. See:
https://www.gov.uk/tax-employee-share-schemes

Civvy21

Thank you.

They were Save As You Earn schemes.

Jeremy535897

They are dealt with in the link:
https://www.gov.uk/tax-employee-share-schemes/save-as-you-earn-saye

Civvy21

Thank you Jeremy. I appreciate your help with this. 

I have read the notes in the link you attached. It looks like we would need to use a "market value" in working out how much CGT we would have to pay. Excuse my ignorance, but it's not crystal clear to me how we reach this valuation. What is to stop us using the valuation for the highest amount we paid for any one share scheme for all our share sales. Does that make sense? So, let's say we bought shares in three different schemes at 3, 4, and 5 pounds. Can we use the 5 pound scheme "market value" for all share sales? Apologies if I have got this completely wrong. I probably have!

Grateful for any advice. 

Jeremy535897

The shares from each scheme are treated as acquired at a particular price. Once this has happened, the shares are pooled with all other shares of the same class in the same company, once they have been held for 30 days. It does not matter if they came from a share scheme or you bought them on the stock exchange. See:
 https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2019

Civvy21

Thank you. It certainly not as straight forward as I thought it was going to be!

It looks to me as if we would sell the shares and then contact HMRC and ask them what the market value is of the shares we have just sold. Once we have this info we can calculate our CGT liability (if there is one). Is that broadly right?

I have a couple of related questions. Hope someone can help.

The shares were acquired through my wife's various SAYE schemes. These shares are currently held in a jointly named sharedealing account. Is doing this enough to enable us to use a combined CGT allowance when we sell the shares? Or do we physically have to change some (half) of the shares into my name before selling?

I appreciate there may not be a straight answer to this one, but I will ask anyway. Would a stocks and shares ISA be of any use to us with SAYE acquired shares. Are there any obvious benefits or disadvantages to these types of ISAs? 

Grateful for any advice. 

Jeremy535897

The base cost of shares bought with money from a SAYE scheme is the price paid at the date the shares were acquired (and you will then pool them if the shares are of the same class). You don't need to ask HMRC for a market value. As the link I attached earlier says:

"You can save up to £500 a month under the scheme. At the end of your savings contract (3 or 5 years) you can use the savings to buy shares.

The tax advantages are:

• the interest and any bonus at the end of the scheme is tax-free
• you do not pay Income Tax or National Insurance on the difference between what you pay for the shares and what they’re worth

You might have to pay Capital Gains Tax if you sell the shares."

You can transfer shares bought under a SAYE scheme into an ISA free of tax, but it has to be within 90 days of you acquiring them. After that you would be treated as disposing of them at market value.

If the shares are held in a joint account that means you jointly own the underlying shares, you already own them between you and there should be need to set up a separate account in your name.