Company Share Schemes vs CGT
Discussion
Quick one for the more accountancy literate pistonheaders.
I have shares in the company I work for, with a 20% discount over 6 month avg market value. So usually a decent buy.
They are locked for 5 years but after that are "tax free".
I'm assuming that the "tax free" is due to them being deducted from salary before tax so no income tax paid on that portion of money, but that any profit I make on those shares would be liable for CGT even after that 5 year period?
I have shares in the company I work for, with a 20% discount over 6 month avg market value. So usually a decent buy.
They are locked for 5 years but after that are "tax free".
I'm assuming that the "tax free" is due to them being deducted from salary before tax so no income tax paid on that portion of money, but that any profit I make on those shares would be liable for CGT even after that 5 year period?
RichTT said:
As much as I'd like to cash it all in for a carerra GT I don't think the missus would be happy! (although I might be).
How would I find out whether it is truly tax free or liable for CGT?
Is there no one at the Company (finance, maybe HR since this is a benefit) who could tell you?How would I find out whether it is truly tax free or liable for CGT?
"Tax free" is a generic term, not very accurate. In your case I think you are indicating the shares are free of income tax.
As for CGT, I have shares in my ex employer's company via an ESPP, If and when I sell any of these shares they will be liable for CGT. So, if your shares were acquired through an ESPP then CGT will apply, is my opinion.
R.
As for CGT, I have shares in my ex employer's company via an ESPP, If and when I sell any of these shares they will be liable for CGT. So, if your shares were acquired through an ESPP then CGT will apply, is my opinion.
R.
The Leaper said:
"Tax free" is a generic term, not very accurate. In your case I think you are indicating the shares are free of income tax.
As for CGT, I have shares in my ex employer's company via an ESPP, If and when I sell any of these shares they will be liable for CGT. So, if your shares were acquired through an ESPP then CGT will apply, is my opinion.
R.
An ESPP is a US scheme. Assuming OP is talking about a SIP and he holds to maturity it’s not liable to CGTAs for CGT, I have shares in my ex employer's company via an ESPP, If and when I sell any of these shares they will be liable for CGT. So, if your shares were acquired through an ESPP then CGT will apply, is my opinion.
R.
https://www.gov.uk/tax-employee-share-schemes/shar...
I recently got stung with some employer SIP shares that I hadn't held long enough to negate the tax liability on them when I left the employer.
Unbeknown to me the tax liability transfers from the 20 percent income tax I ''avoided'' paying when purchasing them from my pre-tax income and instead became 20 percent of the value of the shares... in my case because the shares had done quite well during the period I'd been purchasing them so the £400 income tax on earnings I'd saved became a £2,300 tax liability on the shares I'd purchased.
Ouch.
Unbeknown to me the tax liability transfers from the 20 percent income tax I ''avoided'' paying when purchasing them from my pre-tax income and instead became 20 percent of the value of the shares... in my case because the shares had done quite well during the period I'd been purchasing them so the £400 income tax on earnings I'd saved became a £2,300 tax liability on the shares I'd purchased.
Ouch.
I'll try to get in touch with the plan administrators. Although it's all a bit complicated.
I have about half of the shares from when I worked for the UK subsidiary and half that I've acquired since going international. So held in two separate online systems despite being the same shares.
However both have a holding period of a couple of years before they can be released but with "tax" and then the 5 years release with "tax free".
I have about half of the shares from when I worked for the UK subsidiary and half that I've acquired since going international. So held in two separate online systems despite being the same shares.
However both have a holding period of a couple of years before they can be released but with "tax" and then the 5 years release with "tax free".
2 GKC said:
An ESPP is a US scheme. Assuming OP is talking about a SIP and he holds to maturity it’s not liable to CGT
https://www.gov.uk/tax-employee-share-schemes/shar...
https://www.gov.uk/tax-employee-share-schemes/shar...
Edited by Andrew[MG] on Monday 27th September 10:17
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