Reply With QuoteThis would seem to indicate yes you can: https://www.gov.uk/tax-employee-shar...ares-to-an-isa
First world problem, but many finance savvy on this forum, or work in this areas, so will give it a go.
I have been putting saving into my employers sharesave scheme for the last 3 years.
If the share price falls after the 3 year timeframe you get your money back so it is risk free. Otherwise after 3 years you can claim the shares and sell if you wish to realise the gain.
The share options were bought at the beginning of COVID, so have done quite well and doubled in price (about the first time I have won in many years of doing this)
I understand this type of scheme is subject to CGT, and the CGT allowance was over £12k when I took the options out, but I think CGT allowance is £3k in the next tax year when it matures.
I have read that you can transfer to an ISA in 90 days if maturity to avoid CGT. Presumably that is the shares and not the cash from selling the shares?
Seems to good to be true that you can transfer and then sell once in an ISA and not pay tax. Anyone had a real world dealings with this?
Also it will be over £20k, so can I transfer some to my wife so it can be split across two ISAs?
Thanks in advance.
This would seem to indicate yes you can: https://www.gov.uk/tax-employee-shar...ares-to-an-isa
If it matures within 90 days of the start of the tax year you could transfer 40k into ISAs in your name.
Instead of Bed and ISA where cgt is applicable, you need to complete a direct transfer. Not all platforms allow this but Eqinity, who manage our scheme do. I’ve also spoken to my bank (First Direct) and although they do offer this service, they said the shear volume of applications at the same time could delay the process. As you only get 90 days to complete, it may get a bit bum twitchy!
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Thanks to those who have responded. I will put some numbers to it which I think will help.
It is a 3 year sharesave scheme where I have contributed the maximum £500 per month.
So, I have invested £18k of my own salary after tax. Currently it is looking like it will be worth £36k when it matures given a doubling of the share price.
Can I sell my original £18k stake and £3k CGT allowance, hence £21k of shares on the day of maturity without paying tax?
And then transfer the remaining £15k shares in an ISA, and once in the ISA sell them tax free?
Or drip feed out the remaining £15k over years to keep within the annual £3k CGT allowance?
Hope this all makes sense.
Nice return.
Last edited by Mj2k; 21st December 2023 at 21:04.
Did you have the 5 year option?
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With regard to your question, I’m no expert but I don’t think it works like that. If you sell enough shares to tip you over the cgt threshold, then you are liable for cgt.
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I had the choice of a 3 year or 5 year option at the outset, but settled on the 3 year.Originally Posted by davida
This is one of those questions where the only correct answer, I suppose, is 'ask an accountant'.
That said, in a similar situation, my understanding based on what the accountant I use to augment my paltry knowledge does is:
- The shares I buy with my salary in a given time frame have a (discounted) price
- When I sell them, the difference between that price and the sell price is subject to CGT
- Which may or may not be over the yearly threshold (and if it is under, I have nothing to pay)
- The CGT applies when you sell, not when you are granted the shares, so you can't carry it forward; it would make sense therefore to sell when the allowance is high
- if you sell then transfer into an ISA I can't see why CGT wouldn't apply if it was over the limit. But very interested to know if this is not the case.
Sorry for the no doubt terrible interpretation. I'm on a train home and slightly bored.
I think you can transfer the shares you are granted to an ISA.
On the basis that it is when you sell them CGT comes into play.
I had a sharesave mature for first time last year.
I set up a Stocks and Shares ISA, then filled out the forms etc to transfer the shares into that. They are all still sat in that ISA, one day I will figure out what to do next
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Just reading on my phone but looks like your base cost is half current market value. If you sell £6k worth with base cost £3k, that’s your £3k profit.
If you sell £21k, your gain is £10.5k.
Done this before on a mega one I had. Iirc firstly you pay CGT on the profit not the whole eventual value. Then you can transfer an ISA allowance worth into an ISA tax free. Then use you CGT allowance in this year and I think transfer some to a spouse and use hers. You can also sell in the next year as the profit is on the sale not the option you are holding. I pretty much ended up with no tax on any of it.
I am in pretty much exactly the same position myself (I assume not the same company?!), and have been wondering the same thing. Will be watching with interest how this pans out for you, please keep me posted!
A few tips. Below is my best understanding but I may be wrong, figuring this out myself for a similar scheme closing in Jan (although a smaller amount).
1. The tax man will look at it as you making a gain on each and every share at circa 50% (per your figures), so you can't sell £21k and call that £3k profit (with £18k investment), as in reality that would be £10.5k profit on those £21k shares.
2. If you transfer the shares into a stocks and shares ISA, then they are not subject to CGT. You have £40k to use up of your allowance, as the timing should allow you to transfer £20k into a 23/24 ISA and £20k into a 24/25 ISA if done correctly. This assumes you haven't already used this years ISA allowance of course.
3. Once in the ISA, you can sell the shares to turn them into cash if you wish, reinvest into other options, or transfer into a cash ISA. Alternatively you could sell the shares and withdraw if you need the money and you won't incur CGT, just bear in mind you can't use that ISA allowance again.
My understanding is that once in an ISA they are protected from CGT even if you sell the shares and withdraw the funds from the ISA.
OP - I was in the same position a month ago.
You have options, a chat with an accountant or IFA to assess your full situation is worthwhile.
This tax year your allowance is £6k before CGT kicks in, so if you want to sell this year you have time. If you are married and your other half hasn’t used their allowance, you can gift them some too. Again accountant or IFA assessing your broader situation advisable.
Next year the allowances drop to £3k pp.
As noted above, CGT is only payable on the gain, not to total value of the shares, so a simple spready should be able to help you play with the numbers.
Link to HMRC community question on this exact situation. https://community.hmrc.gov.uk/custom...5d9c773c<br />
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