CGT on Shares held in company SIP
Discussion
Calling all tax experts...
Apologies if this has been covered elsewhere previously, unfortunately due to the 27p invested in the PH search function I couldn't find a relevant answer.
I'm looking for confirmation of the CGT which will be due on shares currently held in a SIP. My region of my employing company has been bought over therefore the SIP arrangement will halt on completion of the sale transaction between companies. At this point our share holdings will be removed from the plan.
Am I correct in thinking that CGT (at 20% due to higher tax bracket) would be due on the value of shares over £12,000, with no NI or Income Tax?
Or is CGT due to kick in at a lower value?
I've spent a while trawling HMRC.gov and while that provides good information regarding takeovers and issue of new shares it doesn't appear to relate to this particular scenario.
Thanks in advance.
Apologies if this has been covered elsewhere previously, unfortunately due to the 27p invested in the PH search function I couldn't find a relevant answer.
I'm looking for confirmation of the CGT which will be due on shares currently held in a SIP. My region of my employing company has been bought over therefore the SIP arrangement will halt on completion of the sale transaction between companies. At this point our share holdings will be removed from the plan.
Am I correct in thinking that CGT (at 20% due to higher tax bracket) would be due on the value of shares over £12,000, with no NI or Income Tax?
Or is CGT due to kick in at a lower value?
I've spent a while trawling HMRC.gov and while that provides good information regarding takeovers and issue of new shares it doesn't appear to relate to this particular scenario.
Thanks in advance.
Op is this a SIP or A SIPP?
My guess is it’s a company sharesave scheme your referring too? Rather than a pension (SIPP).
If it’s a company sharesave CGT would normally be payable on any gain (subject to allowances etc).
However my wife had a scheme at a previous employer that had leverage attached to the sharesave investment/s, and was actually taxable via PAYE.
You need to check with the schemes administrator, as to what scheme this actually is.
My guess is it’s a company sharesave scheme your referring too? Rather than a pension (SIPP).
If it’s a company sharesave CGT would normally be payable on any gain (subject to allowances etc).
However my wife had a scheme at a previous employer that had leverage attached to the sharesave investment/s, and was actually taxable via PAYE.
You need to check with the schemes administrator, as to what scheme this actually is.
I participated in a SIP. Like many SIPs, in this one the purchase price of the shares was discounted by 10% so income tax was payable on the value of the discount at the time that the shares were purchased.
CGT liability arises at the point of sale of the shares. The CGT allowance for 2019/20 is £12,000.
There's two questions I'd like to have answers for. One, is the CGT calculated from the increase arising from the discounted share price or actual share price at the time of purchase? Two, if the discounted price, is it possible to offset the income tax paid at the time of purchase against CGT, otherwise the same value will be taxed twice?
R.
CGT liability arises at the point of sale of the shares. The CGT allowance for 2019/20 is £12,000.
There's two questions I'd like to have answers for. One, is the CGT calculated from the increase arising from the discounted share price or actual share price at the time of purchase? Two, if the discounted price, is it possible to offset the income tax paid at the time of purchase against CGT, otherwise the same value will be taxed twice?
R.
The Leaper said:
I participated in a SIP. Like many SIPs, in this one the purchase price of the shares was discounted by 10% so income tax was payable on the value of the discount at the time that the shares were purchased.
CGT liability arises at the point of sale of the shares. The CGT allowance for 2019/20 is £12,000.
There's two questions I'd like to have answers for. One, is the CGT calculated from the increase arising from the discounted share price or actual share price at the time of purchase? Two, if the discounted price, is it possible to offset the income tax paid at the time of purchase against CGT, otherwise the same value will be taxed twice?
R.
Pretty sure the CGT is calculated on the actual share price at the time of sale. Ie, you sell the shares at market price there and then, after 12K, you pay tax on any remaining profit at the required rate. CGT liability arises at the point of sale of the shares. The CGT allowance for 2019/20 is £12,000.
There's two questions I'd like to have answers for. One, is the CGT calculated from the increase arising from the discounted share price or actual share price at the time of purchase? Two, if the discounted price, is it possible to offset the income tax paid at the time of purchase against CGT, otherwise the same value will be taxed twice?
R.
The Leaper said:
Two, if the discounted price, is it possible to offset the income tax paid at the time of purchase against CGT, otherwise the same value will be taxed twice?
R.
Have a look on your pay slip, are you buying the shares pre tax and Ni, or Post tax and NI (left side/right side), if you've buying them from net salary, then there should be no further income tax to pay (but may fall under CGT), there can of course be different rules for 'free shares', or shares paid in leu of bonus.R.
The Leaper said:
One, is the CGT calculated from the increase arising from the discounted share price or actual share price at the time of purchase?
R.
My previous employment understanding was that CGT was payable if you had a gain of more than the allowance (say 12k).R.
So if the option of 1000 shares at £1.00, and the sale price was £14.00, you would have a taxable gain of £13000 less allowances (say 12k). So 1k actually taxable.
As above in other posts a lot of these schemes are run differently, so you need to check with the scheme administrator.
Deesee said:
Op is this a SIP or A SIPP?
My guess is it’s a company sharesave scheme your referring too? Rather than a pension (SIPP).
If it’s a company sharesave CGT would normally be payable on any gain (subject to allowances etc).
However my wife had a scheme at a previous employer that had leverage attached to the sharesave investment/s, and was actually taxable via PAYE.
You need to check with the schemes administrator, as to what scheme this actually is.
Thanks for the replies so far, I didn't see this yesterday due to travelling home.My guess is it’s a company sharesave scheme your referring too? Rather than a pension (SIPP).
If it’s a company sharesave CGT would normally be payable on any gain (subject to allowances etc).
However my wife had a scheme at a previous employer that had leverage attached to the sharesave investment/s, and was actually taxable via PAYE.
You need to check with the schemes administrator, as to what scheme this actually is.
It's a sharesave SIP scheme - buried in some of the employee benefits documentation I found a section stating that in the event of a takeover/sale then the shares would be sold without NIC or IT. So it looks like the CGT will be only payable on the amount received over £12,000.
The scheme administrators are due to write to us all shortly from what I gather.
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