Company sharesave cgt

Mboardman85

Hi,

I have a company sharesave scheme which matures in November. I have been putting £500 per month for 5 years so by November my initial investment will be £30000 but the shares are now worth approx £110000. Approx profit of £80000.

My question is in regards to capital gains tax. I understand the rules may change by November but under current rules from the research I have done my understanding is that I only pay capital gains on the profit from the shares so the £80000.

£3000 of this will be tax free due to capital gains allowance. So £77000.

It looks like I can transfer £20000 total shares into an ISA direct from company sharesave and pay no tax on profits. So around £5000 initial investment and £15000 profit.

So this leaves me with £62000 profit to pay capital gains tax on.

Say I am on £20000 per year does this mean I have £30000 profit at lower capital gains tax plus £32000 at the higher rate tax if I was to sell all in one tax year. And would I also be correct in saying I could cash in £30000 profit this tax year and £32000 profit next tax year and pay lower amount of capital gains tax.

I realise things can change in the coming months but just trying to work out how best to proceed. I am going to speak to a financial advisor nearer the time but would like to wrap my head around it before I do. Any other advice would be appreciated. 

DRS1

Sounds like you could do with reading this thread especially the bit about flexi ISAs and Equiniti.

Clarification needed on 90 day SAYE shares to ISA transfer. — MoneySavingExpert Forum

artyboy

This could easily be HSBC... not that I'm fishing or anything. The 5 year plan maturing at the end of this year has been nothing less than spectacular in performance given the initial option grant price... assuming the current share price is maintained.

But even if that's wide of the mark, the ISA transfer is the priority, I found Interactive Investor a good bet there, they then allocated the residue to a GIA. Then it's really up to you how fast or slow you want to sell down. I'm doing so very gradually, but then I have an aversion to tax 

kimwp

You'll need a provider with a flexible isa, then transfer the shares into the ISA up to the max of your ISA allowance, sell the shares in the ISA, withdraw the cash and refill with the ISA with shares. Repeat. All shares need to be in an ISA within 90 days of exercising your options to avoid CGT. You'll need various forms for all the actions and bear in mind it takes time for cash to be able for withdrawing from the ISA to create space, transfers between providers etc. The shares don't need to be in an ISA or in the scheme to be protected from CGT, they just need to be in the ISA within 90 days and before being sold.

The gov website on Flexi ISAs has the details about being able to refill a Flexi ISA with SAYE shares.

You should check all of the above to know that is legal and applicable to you. 

kimwp

Oh, and you don't have to do the transfers from the saye provider in the chunks that you are moving to the ISA provider, you can move them all to the ISA provider, but they'll have to sit in the general account until you have space in the ISA. You then need to ask the provider to move them into the ISA, DO NOT sell and move into the ISA. 

artyboy

!!!!!!, that's one hell of a loophole. Better hope that Rachel Reeves doesn't close it down in short order!

kimwp

Well, loophole is an ambiguity or inadequacy in the law. The guidance clearly states that a flexi ISA can be refilled with SAYE shares (of a certain type) and it also clearly states that shares in an ISA with 90 days of exercising the option are protected from CGT. Flexi ISAs are recent, it's difficult to see how the rule about being able to refill them with SAYE shares was written with anything but this in mind tbh.

artyboy

kimwp said:

Well, loophole is an ambiguity or inadequacy in the law. The guidance clearly states that a flexi ISA can be refilled with SAYE shares (of a certain type) and it also clearly states that shares in an ISA with 90 days of exercising the option are protected from CGT. Flexi ISAs are recent, it's difficult to see how the rule about being able to refill them with SAYE shares was written with anything but this in mind tbh.

I'd be more than a little suspicious that HMRC would claim this constituted aggressive tax avoidance. Which as we know is just them playing dirty because they are not smart enough to prevent otherwise legal loopholes from arising.

Definitely one for the OP to approach with caution...

kimwp

Equitini seem to think it's fine "https://equiniti.com/uk/news-and-views/eq-views/saye-cgt-and-eqi-s-flexible-isa/"

artyboy

kimwp said:

Equitini seem to think it's fine "https://equiniti.com/uk/news-and-views/eq-views/saye-cgt-and-eqi-s-flexible-isa/"

Which as we know, counts for diddly when HMRC are coming after YOU... but it's all academic as it won't be me doing it...