CGT liability on company shares

Tofstercat1

Hi, I work for an insurer that is being taken over.  The company who are purchasing us are offering £1.297 for each existing share and about a 1/4 of their shares for every one I currently own (also a 5p divi).  I've been saving £150pm for 10 years and invested £18K to date + £9K of free matching shares.  The current overall value is £31678.  I'm expecting around £15300 mid-year as the cash element of the deal (the £1.297 per share) and the new shares I'm given in exchange for the old shares will stay in the plan.   I don't know if I will be liable for CGT on the £15300?

Hoenir

Likewse I'd expect your employer to provide detailed explanation at some point. 

Tofstercat1

Hi, thank you for your response.  The scheme I'm in provides shelter from Tax totally after 5 years.  I have around £15K that I can withdraw now with no Tax liability.  The newest shares are totally locked for 3 years and between 3 and 5 yeas, there is a Tax liability if I opt to cash them in.  My employer does seem to be a bit clueless as these questions have been raised during a conference Teams call to discuss the take-over, and we just get blank looks from the CEO team.  I need to know whether I should just leave it to see how it all pans out or if it would be prudent to take the £15K now?

Cobbler_tone

Tofstercat1 said:

Hi, thank you for your response.  The scheme I'm in provides shelter from Tax totally after 5 years.  I have around £15K that I can withdraw now with no Tax liability.  The newest shares are totally locked for 3 years and between 3 and 5 yeas, there is a Tax liability if I opt to cash them in.  My employer does seem to be a bit clueless as these questions have been raised during a conference Teams call to discuss the take-over, and we just get blank looks from the CEO team.  I need to know whether I should just leave it to see how it all pans out or if it would be prudent to take the £15K now?

Sounds the same rules as my scheme but you need to get the information from them. There is no CGT tax due if selling them from the scheme, only if transferring them out of the scheme upon leaving.
We also had a similar deal where we got $10 per share for a transition and that was tax free but you also had the option to buy more shares with it. Whether you are better off selling your tax free shares before or after the take over is anyone's guess. You may see the price get diluted by the value of price they are offering for the existing shares. Could also depend on the size and value you place on regular dividends.
Assuming you have gained significantly from the benefit of buying and now having the shares tax free, you could sell those ones and take any worry/risk out of the uncertain future.

I can remember ours vividly. Most people took the dividend and transferred, before the $10 was immediately wiped off and then they sank another 20% in a week. Then they picked up and shares which were originally $30 are now $80+ but we'd all be millionaires if we know what was going to happen.

wmb194

Tofstercat1 said:

Hi, I work for an insurer that is being taken over.  The company who are purchasing us are offering £1.297 for each existing share and about a 1/4 of their shares for every one I currently own (also a 5p divi).  I've been saving £150pm for 10 years and invested £18K to date + £9K of free matching shares.  The current overall value is £31678.  I'm expecting around £15300 mid-year as the cash element of the deal (the £1.297 per share) and the new shares I'm given in exchange for the old shares will stay in the plan.   I don't know if I will be liable for CGT on the £15300?

So this is Direct Line being bought by Aviva.

Tofstercat1

That's all very well, but that information hasn't yet been shared.  I'm concerned that if there's likely to be a CGT liability, it would be better to use some of the 2024/2025 allowance and then the 2025/2026 allowance to minimise my exposure?