Bed and ISA of corporate shares

Painter23

Hi all, my company awards us some of our bonus every year in shares which then vest 3 years later. This is alongside a cash bonus which we pay tax on immediately in our paycheck. The first batch of shares for many years vests this week and we've had various online seminars from the shares provider, Equiniti, to support what to do at the next stage. These include, to my understanding:

1) Selling all the shares with tax and NI liabilities paid from the sale proceeds. Capital gains tax would be paid on the gain difference between the price when the shares were awarded and when theyve vested (they've doubled in value)

2) Selling enough shares to cover income tax and NI liabilities but keeping the remaining shares in the corporate / Equiniti share dealing account. This option allows me to instruct 'bed and ISA' into the Equiniti stocks and shares ISA account I already hold which tracks my firm's share price and would allow me to sell at a later date with no capital gains tax liability.

My question which no one seems clear on is whether capital gains tax is payable on the shares during the bed and ISA process - i.e. when they're sold and repurchased into the ISA.

sausage_time

My understanding is that you would be liable to capital gains tax on the sale (as part of the Bed and ISA process).  Basically the shares are sold first then repurchased with the proceeds inside the ISA.

I'm assuming this is not one of the tax preferential share schemes?  And of course you have £3k CGT allowance too.

I was in a similar position and transferred my shares to joint ownership with my spouse before Bed and ISA (with the shares back in my name in the ISA).  That gave me £6k to play with.

sausage_time

Some information on share schemes with tax advantages (which may or may not apply).

https://www.gov.uk/tax-employee-share-schemes

Painter23

sausage_time said:

My understanding is that you would be liable to capital gains tax on the sale (as part of the Bed and ISA process).  Basically the shares are sold first then repurchased with the proceeds inside the ISA.

I'm assuming this is not one of the tax preferential share schemes?  And of course you have £3k CGT allowance too.

I was in a similar position and transferred my shares to joint ownership with my spouse before Bed and ISA (with the shares back in my name in the ISA).  That gave me £6k to play with.

Thank you for that detail.
I guess my question then becomes why does 'bed and ISA' exists as a potential option if I could just sell them myself and transfer to a cash or stocks and shares ISA if I'd be paying CTG regardless? The way bed and ISA has been suggested makes it sound like it circumvents the CTG liability because the selling and buying into the ISA happens 'behind the scenes' without me receiving the cash, so to speak.

sausage_time

Painter23 said:

sausage_time said:

My understanding is that you would be liable to capital gains tax on the sale (as part of the Bed and ISA process).  Basically the shares are sold first then repurchased with the proceeds inside the ISA.

I'm assuming this is not one of the tax preferential share schemes?  And of course you have £3k CGT allowance too.

I was in a similar position and transferred my shares to joint ownership with my spouse before Bed and ISA (with the shares back in my name in the ISA).  That gave me £6k to play with.

Thank you for that detail.
I guess my question then becomes why does 'bed and ISA' exists as a potential option if I could just sell them myself and transfer to a cash or stocks and shares ISA if I'd be paying CTG regardless? The way bed and ISA has been suggested makes it sound like it circumvents the CTG liability because the selling and buying into the ISA happens 'behind the scenes' without me receiving the cash, so to speak.

If your scheme was one of the approved ones (eg Company Share Option Plan on that page I linked to) then there may be some tax advantage.  My company scheme isn't, so I have not had to find out about the detail, sorry.  I managed the move to joint account and then into my ISA outwith the broker used by my employer.  

Painter23

sausage_time said:

Painter23 said:

sausage_time said:

My understanding is that you would be liable to capital gains tax on the sale (as part of the Bed and ISA process).  Basically the shares are sold first then repurchased with the proceeds inside the ISA.

I'm assuming this is not one of the tax preferential share schemes?  And of course you have £3k CGT allowance too.

I was in a similar position and transferred my shares to joint ownership with my spouse before Bed and ISA (with the shares back in my name in the ISA).  That gave me £6k to play with.

Thank you for that detail.
I guess my question then becomes why does 'bed and ISA' exists as a potential option if I could just sell them myself and transfer to a cash or stocks and shares ISA if I'd be paying CTG regardless? The way bed and ISA has been suggested makes it sound like it circumvents the CTG liability because the selling and buying into the ISA happens 'behind the scenes' without me receiving the cash, so to speak.

If your scheme was one of the approved ones (eg Company Share Option Plan on that page I linked to) then there may be some tax advantage.  My company scheme isn't, so I have not had to find out about the detail, sorry.  I managed the move to joint account and then into my ISA outwith the broker used by my employer.  

Thank you! It's all very complicated 😂