Capital Gains Tax Help - Shares

[MrSmith901]

Hi All,

For years, I have been doing an SAYE through work. The basic premise is, you pay a monthly amount, up to a maximum of £500 over a 3 or 5 year period. This money goes into some invisible pot until the end of the 3 or 5 year period at which point you can purchase company shares at a heavily discounted rate.

If I purchase and then immediately sell the shares, is the "gain" the difference between the discounted rate I paid and the rate at which I sold? If so, I am going to far exceed the £3k limit on capital gains so need to figure out whether to just suck it up and pay the tax or figure out if there are any clever but legal ways around this.

Does anyone have any insight?

[LeighW]

MrSmith901 said:

Hi All,

For years, I have been doing an SAYE through work. The basic premise is, you pay a monthly amount, up to a maximum of £500 over a 3 or 5 year period. This money goes into some invisible pot until the end of the 3 or 5 year period at which point you can purchase company shares at a heavily discounted rate.

If I purchase and then immediately sell the shares, is the "gain" the difference between the discounted rate I paid and the rate at which I sold? If so, I am going to far exceed the £3k limit on capital gains so need to figure out whether to just suck it up and pay the tax or figure out if there are any clever but legal ways around this.

Does anyone have any insight?

If you sell the shares, the CGT is calculated on the discounted rate (the option price). See here for a couple of options:

https://www.gov.uk/tax-employee-share-schemes/save...

[alscar]

MrSmith901 said:

Hi All,

For years, I have been doing an SAYE through work. The basic premise is, you pay a monthly amount, up to a maximum of £500 over a 3 or 5 year period. This money goes into some invisible pot until the end of the 3 or 5 year period at which point you can purchase company shares at a heavily discounted rate.

If I purchase and then immediately sell the shares, is the "gain" the difference between the discounted rate I paid and the rate at which I sold? If so, I am going to far exceed the £3k limit on capital gains so need to figure out whether to just suck it up and pay the tax or figure out if there are any clever but legal ways around this.

Does anyone have any insight?

Obviously if you keep them ( for potential dividend and cap app ) then no tax as such ( yet ) or you could exercise your option , transfer some to your Partner and then either way slowly both start to sell using your annual allowances although if your “ profit “ is large this could take a few years !
Otherwise consider transferring them to an ISA.
I believe you might also be able to put them in a SIPP.

[Gin and Ultrasonic]

It *can* be possible to transfer the shares into an ISA assuming you have ISA allowance, and a Stocks & Shares ISA that allows this (and that you're a UK taxpayer). You can then sell them without CGT.

I added a bit of info about it here, albeit it wasn't relevant to that particular poster......

https://www.pistonheads.com/gassing/topic.asp?h=0&...

[Somebody]

On SAYE shares, there is only CGT to pay if you hold on to them and sell them at a later date. The cost price is what you paid for them i.e. the discounted price on maturity.

What I used to do is to transfer them into an ISA or a SIPP upon maturity within 90 days. You get tax relief on the value of shares transferred into the SIPP too.

See https://www.gov.uk/tax-employee-share-schemes/save...

[MonzaEvo]

Gin and Ultrasonic said:

It *can* be possible to transfer the shares into an ISA assuming you have ISA allowance, and a Stocks & Shares ISA that allows this (and that you're a UK taxpayer). You can then sell them without CGT.

I added a bit of info about it here, albeit it wasn't relevant to that particular poster......

https://www.pistonheads.com/gassing/topic.asp?h=0&...

Thanks for this, very useful information. Our SAYE Sharesave Option becomes available later this year, and this is the exact route I would like to go down. However, My current provider Vanguard only seem to cater for their own funds...... so I'm on the lookout for an additional provider to look after this transfer of a single stock

Rgds
Jonathan

[Gin and Ultrasonic]

I did this through Hargreaves Lansdown who allowed it.

The rules have changed so that you can now have multiple ISA providers in one year as long as you don't breach the overall allowance. I guess you could find one that would allow this and use them for the transaction. The value of shares transferred would count towards your ISA allowance.

[MrSmith901]

Thanks everyone.

So if I take the shares and then transfer them into a stocks and shares ISA, I can then sell them at any point and not pay capital gains? Even if it's like a week after I open the account?

[leef44]

Best is to check with the provider. I used to have VG LS100 in a Hargreaves portfolio. I transferred it over to Vanguard platform. They still sold down the shares and repurchased in Vanguard.

This was not an ISA so I don't know if it is different but I would be surprised if there is such a loop hole to avoid CGT.

[Gin and Ultrasonic]

Yes, there's no constraint on how long you need to keep your shares in the ISA.

It's definitely allowed -
https://www.gov.uk/tax-employee-share-schemes/tran...


Transferring your shares to an ISA
You can transfer up to £20,000 of employee shares into a stocks and shares Individual Savings Account (ISA) if you have shares in a:

Save As You Earn (SAYE) scheme
Share Incentive Plan (SIP)
Your ISA provider must agree to the transfer.

You will not have to pay Capital Gains Tax on any gains you make on your shares if you move them to an ISA.

You must transfer your shares to your ISA within 90 days of when you took out your SIP or SAYE shares.

These shares will count towards your £20,000 ISA limit. They cannot be in addition to the limit.

Ask your employer or ISA provider for more information on how to transfer.

[Pando99]

I done the 90 day transfer last year into my I Web ISA and this was quite easy to do, took a few attempts to get it right but they either called me or emailed me to get it sorted.

Yes you can sell straight away with no CGT liability once in the ISA.