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Any tax-effient way of realising salary part paid in shares?

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Hi
Part of my salary is paid annually in Admiral employee shares and I get a dividend from them every September. I can also realise the value of the shares by selling them back to the company at their current rate after I have owned them for three years.
Doing either means that I pay tax on them at the higher rate. Is there any more tax-efficient way of releasing the money held in them rather than taking it out by having it paid into my salary please? For example, am I able to pay any or all of it into my company stakeholder pension? Any advice would be greatly appreciated.

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  • Linton
    Linton Posts: 18,141 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    The tax paid on company share schemes depends on the nature of the scheme.


    However, in general, the higher rate tax you pay depends on your total taxable income in the tax year. Pension contributions are non taxable, so any contributions you make will lead to a reduction in tax, including any higher rate tax. It does not matter where the money for the contributions comes from, the fact that it came from selling shares is irrelevent.


    So its not a matter of getting your dividends or share sale proceeds paid into your pension but rather simply increasing your pension contributions by the value of this extra income.

    There are some complications:
    1) You cannot get tax relief on pension contributions beyond your earned income. Usually money made from selling shares is not earned. So if your shares are worth more than your annual salary, after deduction of any other pension contributions you make, it would be sensible to split the sales over more than one year.
    2) Higher rate tax relief can get a bit messy and you may have to complete a tax return to ensure you get it. However if your pension contributions are taken prior to deduction of tax and the share selling transactions are managed through your employer's payroll system everything should be OK.
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