Advice needed for CGT when selling shares

Alilou68

Hi everyone I hope this is allowed. My husband has been paying into a company share save scheme for 5 years which has reached maturity and we have an initial investment of 18k which  when the shares have been purchased and sold will be worth around 45k. We have been given some advice that seems to go against everything I am reading online. As I believe our initial investment of 18k should be exempt from any CGT but an advisor has suggested this isnt the case. The intention is to put 20k worth of the shares into an ISA and sell from there so would not pay any CGT on this. We then thought 18k would be excempt and then he could use his 3k CGT allowance leaving only a small amount that would be taxable. Is there anyone here who can advise on this as we are so confused!

jimjames

Alilou68 said:

 As I believe our initial investment of 18k should be exempt from any CGT but an advisor has suggested this isnt the case. The intention is to put 20k worth of the shares into an ISA and sell from there so would not pay any CGT on this. We then thought 18k would be excempt and then he could use his 3k CGT allowance leaving only a small amount that would be taxable. Is there anyone here who can advise on this as we are so confused!

I'm not quite sure what you mean by the £18k being exempt. But essentially £18k is exempt as that's the base cost so you'll only pay CGT on the gains. Moving £20k into the ISA will remove that too.

Alilou68

jimjames said:

Alilou68 said:

 As I believe our initial investment of 18k should be exempt from any CGT but an advisor has suggested this isnt the case. The intention is to put 20k worth of the shares into an ISA and sell from there so would not pay any CGT on this. We then thought 18k would be excempt and then he could use his 3k CGT allowance leaving only a small amount that would be taxable. Is there anyone here who can advise on this as we are so confused!

I'm not quite sure what you mean by the £18k being exempt. But essentially £18k is exempt as that's the base cost so you'll only pay CGT on the gains. Moving £20k into the ISA will remove that too.

Yes I was meaning that we should be able to take the 18k back tax free. 

EthicsGradient

If £18k is the total amount that's been deducted from pay for the scheme over 5 years, and this now entitles you to shares now worth £45k, then wouldn't the £18k cost be divided up between the £20k of shares you can transfer into this year's ISA, and the remaining £25k's worth of shares that you'll own outside the ISA?
So:
transfer £20k of shares into ISA
remaining £25k of shares have a cost of 25/45 * £18k = £10,000
So the remaining gain on the unsheltered shares is £15,000. You could sell a fifth - £5k's worth - to use this years  £3k CG allowance. And when the next tax year comes, again sell whatever has a gain of £3k.

(As the MSE article points out, both you and your husband have a CG allowance of £3k each year, and spouses can transfer unsheltered shares between each other, so if your CG allowance is otherwise unused this year, he can transfer £5k's worth to you as well (the same cost is used for you), so you can sell £10'ks worth between you. 
Sharesave schemes: Are they worth it? – MoneySavingExpert

DRS1

Yes You can't just sell £18k worth of shares and say you have used up all your £18k base cost and don't owe any CGT.  The base cost applies to all the shares.

Oh and the sharesave scheme protects him from income tax (on exercise of the option) not CGT (on the sale of the shares).

Somewhere there is a thread which suggest you may be able to get more than £20k worth of shares into an ISA on maturity.  It is a bit of a loophole using flexible ISA rules putting shares in selling them taking the money out and putting more shares in selling them and so on.  I will see if I can find it because there was a useful link to an ISA provider which did it.

DRS1

Found it

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

Read it all but some way down page one there is a link to Equiniti which is the ISA provider I was thinking of.

If you do it and it works please report back.