SAYE and CGT

[XJ75]

My wife's SAYE scheme is maturing, it's done well; she contributed £18k and it's now worth £49k.

For various reasons we ultimately want to sell the shares, but the gain is well over the CGT threshold so I wanted to know if this is an option:

• Exercise the options but initially keep the shares
• Gift £30k worth of shares to me
• I put £20k worth of shares into an ISA, leaving £10k which is below the CGT allowance
• She is left with £19,000 worth to sell, the proportion of the original contributions for this is around £7k, which leaves her with a gain of £12k, which is also under the CGT allowance

Is this a legitimate approach? Anything else we should consider?

Thanks.

[Eric Mc]

https://inews.co.uk/inews-lifestyle/money/can-i-cu...

[XJ75]

Thanks Eric - I had seen that article and that is how we came up with the plan above. I guess I just wanted to confirm I hadn't completely misunderstood the rules

[Simbu]

We are in an almost as good a position - £18k saved will be worth ~£40k in shares when options are exercised. Provided my employer doesn't balls it up in the meantime

Having the the article Eric referenced, it says:

iNews said:

While you can transfer shares into a tax-free account, such as an Isa or pension, your wife cannot do the same with gifted shares.

My understanding is:

- I exercise my options
- I stick £20k into S&S ISA (and immediately sell)

Leaving £9k of the outlay for £11k of gains.

So in my case I can just sell inside and outside of ISA and be inside CGT limits without gifting.


If it was more, I could gift up to the £12k limit in gains worth of shares to my wife, who can then sell inside her CGT allowance. She cannot use an ISA.

[XJ75]

Yep I've been looking into this more and realised that if my wife gifts me shares, if I "bed and ISA" those into an ISA they will attract CGT.

I can't find a way of avoiding CGT altogether, but the most tax efficient way is for my wife to put £20k directly from the SAYE account into her ISA tax-free. The remaining £29k is made up of roughly £18.5k in gains, so will attract CGT on £6.2k @ 20% = £1,240 in CGT.

[XJ75]

Actually one possibility is my wife putting £20k into her ISA and then gifting me half of the balance, which I can then sell and the gain will be under the CGT threshold. Annoyingly the company that run the nominee account say they can't do a spouse gift transfer, anyone know if I can do this somehow? Maybe first transfer into an account in my wife's name that can do a spouse gift transfer?

[Simbu]

Remember that your CGT allowance will reset at the end of the tax year. If you can wait to liquidate a portion until then 'and' have confidence that the share price won't fall below a value that would diminish the benefit of avoiding tax, then that might be an option to consider.

[B9]

IANAIFA

Can't your wife exercise half of the options today (£9k cost, £24.5k worth = £15.5k gain), and stick £20k of that into her ISA (leaving only a £4.5k gain, so under GCT)

..And then do the same again in April once new ISA allowance kicks in and GTC clock resets?