Help with the dreaded CGT on shares, some in SAYE scheme, some not

toothtyke

Hi forumites.

I have quite a specific question that my searches didn't find answers to in existing threads, so here goes.

I subscribed to a sharesave scheme through work and bought ~8000 shares in the company at an option price of £1,20

Thinking the company would do well in the medium term, I bought another 2000 shares from from savings, at £2.30 each

Using the 90-day rule, I transferred the SAYE shares out of the scheme into an ISA so no CGT due there, They used up £15k of my ISA allowance. Obviously, the Letter of Appropriation only covered the original 8000 and that is all that was transferred.

So I now have the 2000 shares on the platform that I paid cash for, and £5000 ISA allowance left.

The shares have unfortunately crashed to £1.90. I am looking to sell the shares and cut my losses, putting the proceeds into my shares ISA to invest elsewhere. However, sales of other shares have used up £2900 of my £3000 annual allowance for CGT.

So here comes the question I can't find a straight answer to on HMRC website or elsewhere:

If I sell the non-SAYE shares, what figure can I use as cost price for capital gains purposes? Can I use the purchase price of £2.30 and therefore declare a loss (potentially allowing me to bed and ISA a few other shares I hold) or would I have to average out the price with the ones in the SAYE scheme?

The HMRC site suggests multiple share purchases in the same stock need to be averaged out, which gives (8000x£1,20)+(2000x£2.30)/10000=£1.35. This would mean selling at £1.90 I would still be seen to have made a taxable profit.

I would argue that, since the SAYE shares were transferred from the scheme into an ISA within 90 days of maurity, that they were treated as a separate entity and that the non-scheme purchase price of £2,30 should stand. However, if I'm wrong, I'll not only make a loss on those shares but be clobbered for CGT as well!!

Any advice from anyone who has done similar (or is conversant with the rules!) would be gratefully received

artifin123

No need to let the Probate Office know anything. Just be sure to keep good records of what inheritance you got and what you sold. Your executors might have to include any money you made from the sales when figuring out inheritance for your own estate.

toothtyke

I think we're at cross purposes. My concern isn't inheritance tax planning but capital gains tax.

Given I purchased the additional shares BEFORE transferring the cheaper SAYE-option shares into the ISA, would I have to use the average price paid as my cost basis for capital gains?

https://forums.moneysavingexpert.com/discussion/comment/81878529#Comment_81878529

FrugaiMacDugal

A Google/AI search says,

No, shares held inside an ISA are not added together with shares held in a General Investment Account (GIA) for average cost calculations or Capital Gains Tax (CGT) purposes.

No Merging: HMRC treats ISA holdings and GIA holdings as separate for tax purposes.

You may get more replies on the savings and investments board.

artifin123

@toothtyke You can use £2.30 as the cost basis for the 2000 non-SAYE shares. The SAYE shares in the ISA are treated separately so you don’t need to average them.

toothtyke

Thanks for the responses.

My concern was that, given all 10000 shares were at the outset, all in a general investment account together prior to the transfer out of 8000 into my ISA under (the ones eligible for in specie transfer under the 90-day rule) that they would be treated as one holding. Thankfully, it seems not.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81878571#Comment_81878571

Were they all in a GIA? You said earlier "I transferred the SAYE shares out of the scheme into an ISA" but didn't specify this being done via a GIA?

toothtyke

https://forums.moneysavingexpert.com/discussion/comment/81878576#Comment_81878576

That may be me not understanding the status of the shares prior to the transfer

I saved from salary for 3 years into the scheme and purchased the shares at the option price. These appeared in an equateplus account. I transferred more money from savings into the equateplus account and used it to purchase more shares.

A colleague told me about the 90-day rule to transfer in-specie to an ISA. So I applied for a Letter of Appropriation, opened a shares ISA (aj bell) and instigated a transfer. This only allowed for transfer of the 8000 shares bought at the option price. The rest remain with equateplus.

To clarify, the shares never went via a GIA with AJBell but is the equateplus account not a GIA, given it isn't an ISA? Or does the transfer within 90 days effectively mean that for tax purposes, those 8000 shares are seen as being in an ISA from day one?

DRS1

This is a fascinating question and I am not sure I am going to be much help but I did find this page on Gov.uk which made me think you may be OK

Tax and Employee Share Schemes: Save As You Earn (SAYE) - GOV.UK

It contrasts the position where you transfer the SAYE shares to an ISA or to a pension. They say you may have to pay CGT if the shares go up in value between the exercise date and the transfer date if you transfer to a pension but not if it is to an ISA which suggests to me that the holding of the SAYE shares outside the SAYE scheme and the ISA for that up to 90 day period just gets ignored and you are treated as if the shares went straight from the SAYE scheme to the ISA.

Of course that may be wishful thinking because most people won't have complicated matters by buying more shares outside the SAYE scheme.

toothtyke

Indeed @DRS1 I have made my life difficult as well as lost money by purchasing additional shares.

When it came to making the transfer, equateplus rightly only issued a letter of appropriation for the shares purchased at the option price. Therefore, those shares must have been considered as a separate holding.

Common sense dictates that they either the same holding or they are not and if they are not, the higher purchase price applies to this holding. However ten years in self employment prior to my current job did most definitely teach me one thing regarding HMRC - if common sense dictates one thing, they will consistently dictate the opposite!

DRS1

Yes never try to apply common sense to taxation.

I feel I should know how pooling works with employee share schemes (and if there is an obvious exemption) but the only thing I could find is a "same day acquisition" thing where you can elect to split holdings of employment related shares acquired on the same day between those from a tax favoured scheme (like the SAYE Scheme) and those which are not tax favoured (eg where you paid income tax on the acquisition). They allow you to treat the ones with the higher base cost as disposed of first (so you get a lower CGT charge) but that won't help you as the other shares you bought were not employee shares and don't sound as if they were bought on the same day.