Employer Shares & Leaving

unclebatman

Morning everyone

Wonder if you can help with my issue - later this year I’ll leave my job where I have previously purchased shares (this is not currently a listed company but has partial employee ownership due to size). The shares were purchased in their 2023 ISO.

I’m told that these cannot be retained as I’ll no longer be in their employment and instead will be paid to me at “fair value” within 30 days of my leave date. I’m assuming this means a modest growth and so I’d expect a figure slightly north of the £10k invested 2 years ago. 

My issue comes when reinvesting that money - I am a fairly novice investor with a Barclays Smart Investor ISA (which is doing OK for me but will be maxed out for 25/26 by the time this payment lands) and my workplace pension which has done very well for me of late. 

What’s my best play here? Can I ask for payment to be made to my SW workplace pension? Venture further into funds opening a separate account with the likes of Vanguard (or even SW) etc? Or something else obvious I’ve not yet thought of?

Any and all help appreciated! 

InvesterJones

You'll have to speak to them to discover if they can pay into your workplace pension for you - I would guess they probably wouldn't, so up to you if you want to manually pay it in, or do something else with it. Other options include starting/adding to a private pension (SIPP) with Vanguard or anyone else. Or if you think you'll need it before pension age then consider either investing it in a general investment account, putting it into savings accounts, or buying gilts or premium bonds.

Yorkie1

It may well be too late to contribute to your work pension once you have left and got the money, but only they can confirm this one way or another.

If you haven't done so recently, it might be worth taking a step back and reviewing your overall financial position. In addition to pension provision and how much you might need in order to retire, consider: Emergency savings? Partner / spouse? Money needed for projects in the next 3 - 5 years? Plans for retirement? And/or getting children through school / uni / driving lessons / first property etc.

These all might indicate a different outcome for the money when you receive it.

I don't know enough to suggest whether you are likely to need to pay CGT on the shares when you are paid for them. Everyone has £3K a year 0% allowance, and from what you say, any gain on the shares - if liable to CGT at all - may not exceed that amount anyway.

smilingwarthog

Check the share scheme documentation and your contract carefully. If it is an EMI scheme that will be tax-efficient for you, but it relies on the employer being diligent with various reporting issues to HMRC to maintain compliance. If you're happy to, upload the docs to ChatGPT or similar to get a headstart on what you need to know.