Sharesave, how to best realize the cash

wort

Hi, I am a complete novice but took out a sharesave 3 years ago. I can now buy shares at the price 3 yr ago less 20% . The share price has risen to three times original price. So I understand to buy the shares and then sell.
everything I read says put them into a stocks and share Isa then I don’t pay CGT. But can I then transfer the proceeds of selling into a cash Isa ?
Or is it a case of once I sell they are liable to CGT ? Therefore only able to realize £6000 in this tax year and £3000 from next April. And have to leave the rest as shares ?

ColdIron

You can transfer the shares into a S&S ISA (up to £20,000) and if done within 90 days of the scheme ending there is no CGT (and you haven't sold them anyway). Once in the ISA you can sell them with no CGT liability. Then you can transfer them into a cash ISA

Brie

If you transfer them as shares to an ISA you run the risk of the share price dropping before they are sold.  So it may not be worthwhile waiting.  Check what your CGT limit is and plan things from there.

wort

Hi thank you both, @ColdIron I take it when you say they can be sold without CGT, that I could only sell as I posted above? So £6000 before April etc. not all the shares ? 

artyboy

wort said:

Hi thank you both, @ColdIron I take it when you say they can be sold without CGT, that I could only sell as I posted above? So £6000 before April etc. not all the shares ? 

Once they have been transferred to your ISA, they are then exempt from CGT, so even if you had a full 20k in there and (based on your own share value appreciation figures) £14k of that was capital gain on your initial investment, there would be no CGT due if you sold.

If you have more than £20k realised from this scheme and/or you have already used some of your 2023/4 ISA allowance, then you won't be able to transfer everything into an ISA - again using your own appreciation figures, if you had put the max. £500/month in over 3 years, you'd be sitting on a value of around £60k now. Any excess over your ISA transfer limit would remain liable to CGT if you sold.

Hopefully you've already done your research, but it's a very specific process to transfer into an ISA from a sharesave scheme, it is not the same as a sale/repurchase (or Bed&ISA).

wort

Thanks artyboy. That’s really good to know.
I think if I buy the shares and realize the 6000 cash,as per this years allowance.I will have under 20,000 so the other shares can go into an ISA. 

Does this mean they can go into a cash Isa ? Or a stocks and share one? 

artyboy

wort said:

Thanks artyboy. That’s really good to know.
I think if I buy the shares and realize the 6000 cash,as per this years allowance.I will have under 20,000 so the other shares can go into an ISA. 

Does this mean they can go into a cash Isa ? Or a stocks and share one? 

You're asking me if shares need to go into a cash ISA or a stocks and shares ISA? I suspect you can work that one out 🤣

If you don't already have a S&S ISA, I found that Interactive Investor handled my own transfer very well - I realised about £45k total, and what they did was transfer the whole amount from the scheme, put the max £20k into my ISA account, and put the rest into a GIA, which I'm gradually selling down from. 

wort

Sorry I meant after they go into stocks and share Isa, I can do an interspecies transfer to a cash Isa .
It says we have 90 days to decide so I can buy shares then put them into a stocks and share Isa after selling my 6000pounds allowance.?

ColdIron

wort said:

after selling my 6000pounds allowance.?

Will the shares be worth more than £20,000?

artyboy

wort said:

Sorry I meant after they go into stocks and share Isa, I can do an interspecies transfer to a cash Isa .
It says we have 90 days to decide so I can buy shares then put them into a stocks and share Isa after selling my 6000pounds allowance.?

Ok let's unpick this. Firstly, the term is "in specie", and that is a direct transfer of shares from one provider's account to another. If you are transferring shares, what makes you think that you could transfer them into a cash ISA?

So no, you can't. Cash goes in a cash ISA. Shares (and also cash) can go in a S&S ISA. It's that simple. Once the shares are in a S&S ISA you can sell them with no CGT due, and THEN transfer the cash into a cash ISA - if that's your end goal.

i don't know who is administering your sharesave scheme, but for me it was Computershare (using the Equate Mobile platform) - they only gave the option to buy all or sell all. So are you sure you can do a partial sell within the scheme? If not, you may need to acquire all the shares and then do an in specie transfer - that's why I suggested Interactive Investor, as they handled it well when the shares were worth over £20k

Your starting point for working out CGT is the same wherever you sell from - it's the original discounted option strike price that is used as the acquisition value.

wort

 It's that simple. Once the shares are in a S&S ISA you can sell them with no CGT due, and THEN transfer the cash into a cash ISA - if that's your end goal.

@artyboy this is what I was asking Thank you 
The sharesave is with equiniti they are offering an EQi Isa. 1st option is buy the shares with my savings and put into Share service
2nd option is to put into the EQi Isa , the dealing rate is 10.99 .

If I choose the 1st option could I then move them into an ISA of my choosing up to 20,000 within 90 days without CGT ?
or is the best option to use the EQi product they are offering.
I haven’t used any ISA allowance this year.