CGT: totally clueless here.

missbunbury

I am very out of my depth. I have shares given to me as sign on bonus that are now vested and sellable, plus shares I have purchased myself via an employee discount scheme. I want to take money out of the shares to do an extension on the house. I am frightened about capital gains tax because I have literally no idea how to make sure I pay this. I'm a higher rate tax payer with a non-tax paying spouse. I am not self-employed so don't usually have to do a tax return.

subjecttocontract

Accountant ?

dunstonh

It's relatively straightforward if you have retained the purchase data as its effectively the difference between the buying price (zero in the case of free shares) and the selling price.

Since you have a pool of the same shares built up across multiple purchase or gifting dates, you will have to perform a section 104 calculation. However, AI can do this reliably acorss a single share.

You will be taxed at the higher rate of CGT if your gains are above £3000 as you are a higher rate taxpayer.

You can transfer some shares to your spouse to use her £3000 allowance and her gains will be taxed at the lower CGT rate (unless we are talking a very large disposal/gain).

Each year you should look at the bed & ISA the shares. i.e. use the annual CGT allowance to put an amount in the ISA wrapper, assuming the amount involved is high.

DRS1

If you got the shares from some sort of employee scheme then the employer should have given you some literature which explains how the shares are taxed. I am not sure what an employee discount scheme would be but there are some Revenue approved schemes which have special tax treatment (eg an SAYE Scheme or a SIP). Or if they are from non approved arrangements it is possible you paid income tax on the date you got the shares and the CGT base cost for them would be the market value on the date you got them.

mta999

You have an allowance each tax year so try and sell some this tax year and sell some more next tax year

missbunbury

I obviously need to go back and look again at the stuff work have given me. A question though: since I'm a higher rate tax payer and my wife isn't a taxpayer at all, would it make sense to gift all the shares we want to sell to her first, or does the fact that she isn't using her personal allowance make no difference?

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81895246#Comment_81895246

The personal allowance is for Income Tax not CGT. For CGT you both have a £3k allowance (that is £3k of gain). Her CGT rate above the £3k would be lower than yours because you are a higher rate tax payer and she isn't.

dunstonh

question though: since I'm a higher rate tax payer and my wife isn't a taxpayer at all, would it make sense to gift all the shares we want to sell to her first, or does the fact that she isn't using her personal allowance make no difference?

Can't answer without knowing the amounts of the gain/disposals. Remember you have a £3000 CGT allowance, as does she. Plus, we are close to the new tax year. So, you could do a split sell.

As mentioned above, personal allowance doesn't come into it. However, the CGT rate is selected depending on what income tax band you fall within.