Company Shares or ISA

Stegor

Hi all, I currently have around £69k in shares with my company, the value has risen from around £9 a share when I started to £28.50 a share currently, peaking at £40 a share early last year. I believe the shares are going to bounce around their current value for the foreseeable. I have the shares split between myself and my wife to counter the new dividend tax rules.

My question is would now be a good time to move the shares in small lump sums each year (to counter CGT) to a stocks and shares ISA and if so which platform would be the best to look at. The shares were planned to be utilised as part of my retirement but the new rules mean I will likely be taxed on them when I sell them. I am 54 and hope to retire before I turn 60. Thanks for your help.

jimjames

If you've not used an ISA at all this year then you can get £20k allowance before April 6 and another £20k after. You can't move the shares into an ISA but can sell, pay the money into the ISA and rebuy them or another investment. If you only have these shares then diversifying with a more balanced investment might be a good idea. By doing this you'll also make the most of the CGT allowance this tax year and next. If you don't sell any then that allowance is lost.

InvesterJones

Like that saying goes, the best time was X years ago, the second best is now. CGT allowance is currently £6000 but dropping to £3000 in a few weeks so speed probably of the essence. Most platforms offer stocks and shares isas and can hold shares in UK companies so pick based on what services you require and how often you're likely to make any changes. iWeb are possibly the cheapest if you're not going to do anything (and even if are, are still likely near the top), but have a more no-frills approach.

wmb194

Stegor said:

Hi all, I currently have around £69k in shares with my company, the value has risen from around £9 a share when I started to £28.50 a share currently, peaking at £40 a share early last year. I believe the shares are going to bounce around their current value for the foreseeable. I have the shares split between myself and my wife to counter the new dividend tax rules.

My question is would now be a good time to move the shares in small lump sums each year (to counter CGT) to a stocks and shares ISA and if so which platform would be the best to look at. The shares were planned to be utilised as part of my retirement but the new rules mean I will likely be taxed on them when I sell them. I am 54 and hope to retire before I turn 60. Thanks for your help.

How/where are they currently held?

Mark_d

If I was you I would certainly consider a Bed and ISA strategy to transfer 20k of your shareholding into an ISA each year.  I have my sharedealing and S&S ISA accounts with AJ Bell.  Would certainly recommend them.

Are you happy having 69k invested in one company?  Perhaps when you sell shares each year, your ISA investment could be used to buy shares companies that better reflect your visions and investment priorities?  Maybe investing in funds would be a safer option for someone less experienced with investing.

Albermarle

I believe the shares are going to bounce around their current value for the foreseeable.

You can not know this. Tomorrow there could be some negative revelation about the company, and a subsequent big drop in the share price. Holding individual company shares is regarded as high risk. 

So as suggested in the previous post, some diversification could be a good idea.

Stegor

Thanks for the replies, I think it's confirmed my thoughts to sell enough shares each year so that I don't pay CGT and pay it into a S&S ISA. The shares are currently held in my company Share Store and we receive dividends twice a year. My wife doesn't pay tax so the majority is in her name but we should be ok to sell around £7,500 each and not break the £6k CGT allowance for this year if we're quick!!

Any advice on which platform would be best to open the ISA would be appreciated. My wife has a SIPP with Vanguard but we're open to all options, thanks again.

jimjames

ISA really depends what you are going to do with it. If you plan to rebuy the same shares then that rules out platforms like Vanguard that only offer their own funds. You'd ideally want one that doesn't charge for holding the shares on it and only for transactions. I use iWeb which costs £5 for each buy/sell order but no ongoing fees.

Stegor

I'd be looking at a fund that I didn't have to keep too much of an eye on.

Stegor

Hi all, had a thought over the weekend whether it would be better to sell the shares, remaining below the CGT threshold, then put them into my pension. My question on this would be whether to pay it all into my workplace pension (tax free but NI paid) or pay some into there ensuring my wages remain below the Higher Rate threshold and pay the rest into a SIPP or is the S&S ISA the way to go. Any thoughts appreciated, thanks

pecunianonolet

Sorry for hijacking this thread.

@Stegor I think I know which company you are talking about and if so, it depends what type of pension plan you have with them if you think about topping up the pension. Some of the older plans are rather amazing compared to what is available today, if we talk about the same company ,-). However, I might be totally wrong with my assumption.

What happens, if the ISA subscription limit has been reached for this year? Can you sell on 4th April to benefit from the higher 6k CGT allowance, park the money in a savings account, move the money to a S&S ISA on the 6th April  and rebuy the shares on the 8th April when markets are open again after Easter?

ISA allowance is only 20k again next year but would the bought back shares not count against the UK ISA allowance? So if you would only sell/buy back worth 5k, would the remaining allowance of 20k remain to fill a cash ISA? I guess not, as there is a consultation first on UK-ISA but no confirmed introduction date.