Company shares questions

Gavcob

Hello,
Been reading other similar posts to this but need some clarification as I have never sold any shares.
My company lets me put up to 150 per month pre tax and NI into their shares.
I also get one free for every 4? Or 5?, I need to check that.
If I keep the shares more than 5 years I pay no Tax if sell them but I would be susceptible to CGT? 
They are worth over 60k now and I am 53.
Can I sell up to 3k a year from now to say 63 and not pay any CGT now or when I finally sell them after that? I have been told it's not that simple.........?
Also if I sell them then do I have to contact HMRC if below 3k?
Regards
Gavin

poseidon1

Gavcob said:

Hello,
Been reading other similar posts to this but need some clarification as I have never sold any shares.
My company lets me put up to 150 per month pre tax and NI into their shares.
I also get one free for every 4? Or 5?, I need to check that.
If I keep the shares more than 5 years I pay no Tax if sell them but I would be susceptible to CGT? 
They are worth over 60k now and I am 53.
Can I sell up to 3k a year from now to say 63 and not pay any CGT now or when I finally sell them after that? I have been told it's not that simple.........?
Also if I sell them then do I have to contact HMRC if below 3k?
Regards
Gavin

I do wonder whether employers as part of the SAYE  share information pack, ever inform employees that there is an option to transfer the shares within 90 days of vesting to a stocks and shares ISA  without triggering a CGT sale per HMRC guidance below - 

https://www.gov.uk/tax-employee-share-schemes/save-as-you-earn-saye#:~:text=This is a savings-related,the savings to buy shares.

In your case, if you have a batch of shares which have just passed the 5 year maturity, you could transfer up to £20k worth to ISA, assuming of course you have not already used your ISA allowance.

Any shares already well outside the 90 day isa transfer window, may trigger CGT on sale.

However you are not restricted to selling just £3,000 worth. You are overlooking the  £150 per month you paid over the 5 year period, so at the very least you have a cost figure in your favour, with cgt only payable on profit made over and above your original cost. 

Finally if you know you will have a batch of SAYE shares maturing at some point in the new tax year 2026/27, why not plan to preserve your ISA allowance for those shares, ie plan ahead.

Gavcob

Hi,
Thanks for reply
I have been paying these in since 2010 monthly, so 15 years ish.
Isa allowance is used this year.
I know I don't get CGT on it all, just what it has increased by.
Just thinking out how to reduce my CGT bill for future.
Est I put 30k in and it has doubled ish.
So my 30 I wouldn't pay it on just the gains.
Say in a strange scenario if I took 3k a year for 10 years and shares never increased, then I would be left with 30k I could take tax free as my initial investment? I know it wouldn't quite work like that....?
Regards
Gav

.

poseidon1

Gavcob said:

Hi,
Thanks for reply
I have been paying these in since 2010 monthly, so 15 years ish.
Isa allowance is used this year.
I know I don't get CGT on it all, just what it has increased by.
Just thinking out how to reduce my CGT bill for future.
Est I put 30k in and it has doubled ish.
So my 30 I wouldn't pay it on just the gains.
Say in a strange scenario if I took 3k a year for 10 years and shares never increased, then I would be left with 30k I could take tax free as my initial investment? I know it wouldn't quite work like that....?
Regards
Gav

.

If you only sold £3000 worth, you would only have realised a gain of £1500, based on having originally paid £1500 ( you say the shares have doubled).

Therefore to use the current £3000 exemption you would need to sell £6,000 in value.

So in your example if the share value remained static for next 10 years you would have sold all the shares  at £6,000 each year and paid  no tax ( assuming cgt exemption remained at £3,000 and not reduced further which is quite possible).

Obviously as the shares oscillate up and down in value, some years you can sell less and other years more. You simply divide the shares you hold by the amount you originally paid, and that gives your running cost value to calculate  gains on future sales.

I have to say if you have had the shares since 2010, as recently as the  2022/23 tax year the CGT exemption was as high as £12,300, so you have had many opportunities to sell a substantial number of shares at zero taxable gain in the past. Any reason why delayed so long to consider disposals?

Gavcob

Hi,
You assume I know what I am doing lol....
Company shares just seemed like an easy win for me when I first started it, no Tax or ni and they give me free shares too.
The share price has consistently gone up in value so I thought best leave them in to keep making money as part of my retirement nest egg. It's a big company.
Only realised implication of CGT recently and hence now trying to put steps in to reduce the impact of it.
Didn't realise I could take up to 6000 each year ish and have no or little CGT. I am however over the next few years still investing each month.
One thing that may scupper it is hoping to finish work in next 5 years or less and think we have to sell them at that point.
Regards
Gav

ColdIron

Gavcob said:

One thing that may scupper it is hoping to finish work in next 5 years or less and think we have to sell them at that point.

Is that 'we' you as one of a collective of employees or a spouse or similar? If the latter you can gift some and double the Annual Exempt amount to £6,000 and maybe have another £20,000 ISA allowance

DRS1

It may not make any difference but this does not sound like an SAYE Scheme to me.  It sounds more like a SIP (Share Incentive Plan - used be called a Profit Sharing Scheme).

This is a guide on how they work and the tax treatment.
Share Incentive Plans (SIPs)

No mention of transfers to ISAs in there.  Here is a note on that
How to transfer SAYE or SIP shares into an ISA | Charles Stanley

What is interesting to me is maturity under the SIP.  I would have thought that was when 5 years was up from the start of the award but the OP has kept shares in the plan for 15 years.  As and when the OP has some spare ISA allowance it may be worth asking the employer whether he can transfer any of the shares from the SIP to an ISA or whether the maturity date has passed.

DRS1

Oh and on the "finish work" point you may just want to check with the employer that what you are doing counts as a good leaver under the rules.  Retirement should but just quitting probably would not.

Gavcob

Thanks all, will check up more with my employer
Regards
Gav