Tax when leaving company share scheme
Discussion
I have some shares that are in a company share save scheme (SIP?) I've been paying into via salary sacrifice for a couple of years.
Our company is due to change hands and we are set to lose the scheme (shares are in the PLC parent company).
Normally there would be tax to pay if I took some shares out voluntarily, but as this is forced I think it works differently?
Does anyone know what happens and what tax is due?
If the shares came out of the scheme but I still held them as shares would I pay tax on their current value or the amount I originally sacrificed?
I've also seen something from HMRC saying if you have no option but to cash shares in then there is no tax due, but I'm not sure if this will apply.
Is there likely to be any way of splitting them across 2 tax years?
Our company is due to change hands and we are set to lose the scheme (shares are in the PLC parent company).
Normally there would be tax to pay if I took some shares out voluntarily, but as this is forced I think it works differently?
Does anyone know what happens and what tax is due?
If the shares came out of the scheme but I still held them as shares would I pay tax on their current value or the amount I originally sacrificed?
I've also seen something from HMRC saying if you have no option but to cash shares in then there is no tax due, but I'm not sure if this will apply.
Is there likely to be any way of splitting them across 2 tax years?
Best way to deal with a ShareSave (SAYE) scheme is to let your participation in it "mature" by whatever mechanism unfolds. One of the big pluses with such schemes is that up to £20,000 of shares emerging from them can be transferred into an ISA completely free from all tax and then continue tax free within the ISA.
https://www.charles-stanley.co.uk/group/cs-live/tr...
Aside from using an ISA, any gains made upon sale of shares would be subject to the normal CGT regime,
£12,300 annual tax free allowance
10% tax rate in the basic rate band
20% tax rate in the higher rate band
Example here from the Vodafone scheme,
https://www.computershare.com/uk/Shared%20Document...
https://www.charles-stanley.co.uk/group/cs-live/tr...
Aside from using an ISA, any gains made upon sale of shares would be subject to the normal CGT regime,
£12,300 annual tax free allowance
10% tax rate in the basic rate band
20% tax rate in the higher rate band
Example here from the Vodafone scheme,
https://www.computershare.com/uk/Shared%20Document...
blank said:
It's SIP rather than ShareSave so I already have shares and get dividends etc.
I know at my place that shares bought under the SIP scheme have to be kept for 5 years to avoid the usual tax and stoppages, however, if I was made redundant or the scheme closed then the shares I've bought automatically become exempt from tax regardless of how recently. I would bet your scheme will the same.
Totally agree with the comment about reading the terms/rules. You'll also get some specific comms laying out your choices so look out for that.
What I'd expect to happen on a SIP is the shares will need to come out of the plan, but there wouldn't be any forfeiture (of free/matching shares, should any have been awarded), no income tax, and no CGT if you sell immediately.
If instead you keep them you'd be subject to CGT when you come to sell - which will be based on the market value of the shares on the date they originally came out of the plan. However you should be able to keep them in an ISA (it might even be one of the exit choices offered by the share plan administrator) anyway which would then shield you upon subsequent sale.
What I'd expect to happen on a SIP is the shares will need to come out of the plan, but there wouldn't be any forfeiture (of free/matching shares, should any have been awarded), no income tax, and no CGT if you sell immediately.
If instead you keep them you'd be subject to CGT when you come to sell - which will be based on the market value of the shares on the date they originally came out of the plan. However you should be able to keep them in an ISA (it might even be one of the exit choices offered by the share plan administrator) anyway which would then shield you upon subsequent sale.
Thanks for all the info, unfortunately I don't have any paperwork to hand (can't remember ever having any to be honest) and we haven't had any comms yet.
Sounds positive though, and seems like I should be able to cash out tax free which is good news, and means it will have worked out to be a cracking way of saving!
Sounds positive though, and seems like I should be able to cash out tax free which is good news, and means it will have worked out to be a cracking way of saving!
To close this off for anyone in the same boat.
All money came out tax/NI free.
Figures for anyone interested:
I'd been sacrificing £150 per month for 30 months, so £4.5k total in but actual cost of somewhere between £2k and £3k over that time as it was pre tax/NI.
I got £6,800 from the sale of the shares, and also got about £200 in dividends over that time.
Probably the best "investment" I've ever made!
All money came out tax/NI free.
Figures for anyone interested:
I'd been sacrificing £150 per month for 30 months, so £4.5k total in but actual cost of somewhere between £2k and £3k over that time as it was pre tax/NI.
I got £6,800 from the sale of the shares, and also got about £200 in dividends over that time.
Probably the best "investment" I've ever made!
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