I have £30,000 in a Sharesave scheme: How can I avoid tax when I sell the company stock?

Daily Mail​

5 days ago

For the past three years I've been paying £500 per month into my company's Sharesave scheme which is due to finish in August. The option price is 30p per share but the shares are currently at 50p so I definitely plan to take the shares.
However, the price can be volatile and I don't like having so many eggs in one basket - so I want immediately sell and put the money into ETFs in my stocks and shares Isa.
I'm keen to avoid capital gains tax. Can you suggest the most tax efficient options to sell the shares and get them into mine and my partner's Isas?
I understand there's a mechanism to get the shares into my Isa within 90 days of taking them and selling from there - but the shares are worth about £30,000, so above the £20,000 Isa allowance.
Can I put some of them into the Isa up to my allowance and sell the rest outside of the Isa to minimise CGT? Could gifting some to my partner help?
And given the relatively low value, can I achieve this without paying a financial advisor to sort it out for me? G.G, via email
> How capital gains tax works: The rates you pay - and how to cut your bill
This reader is worried about their potential capital gains tax liability as a result of the £30,000 in the Sharesave scheme
Harvey Dorset, of This is Money, replies: Sharesave schemes, also knows as Save As You Earn, or SAYE, are programmes offered by employers that allow staff to buy shares in the company they work for at a fixed price.
When the scheme matures, savers can either purchase the shares at the option price agreed at the start of the scheme, meaning they could gain shares at a discount, or can withdraw the cash.
In your case, the value of the shares have increased by around 66 per cent from the option price, so taking these shares and selling them on could provide a healthy return.
With £30,000 saved into the scheme, however, you are right that you could face CGT liability when selling your shares.
Assuming your Isa allowance has not yet been touched this financial year, you will still only be able to move £20,000 worth of shares into the tax wrapper.
That said, there may be ways to cut down any CGT bill, or even avoid it entirely when you do cash i.
This is Money spoke to expert financial adviser Paul Crossan to find out what options might be open to you to slash a potential tax bill.
Paul Crossan, senior financial planner at Hargreaves Lansdown, replies: Sharesave plans are an excellent way to build savings.
They allow employees to buy company shares at a fixed price and include a valuable safety net, because if the share price falls below the set price, employees can still choose to take back their full savings as cash – usually with interest.
That said, you are absolutely right to be cautious about 'having so many eggs in one basket'.
Once the scheme has matured and you own the shares, the risk profile changes dramatically, from a situation where the worst outcome is getting your money back to one where you now own volatile, high-risk single company shares.
Depending on the level of diversification you have within your broader portfolio, this may not be right for you.
If you decide to diversify, you can still protect your investment from tax. You can transfer up to £20,000 of the proceeds from your Sharesave scheme into an Isa - or potentially a larger amount subject to individual contribution limits into a pension such as a Sipp within 90 days of maturity, without being subject to capital gains tax on the move.
Once inside a tax–efficient wrapper, the shares can be held or sold without incurring CGT, and the proceeds can be reinvested into more diversified investments.
If £18,000 has been saved over three years, your gain may be around £12,000. Using a £20,000 Isa allowance could shelter roughly two–thirds from CGT.
If you decide not to use a pension, your £3,000 annual CGT exemption, if available, could help offset the remaining gain and if necessary, use the CGT annual allowance over subsequent tax years - although this may mean carrying the risk of holding the single stock for longer.
In response to your query about gifting to a partner, HM Revenue and Customs generally allows shares to be gifted to a spouse or civil partner without triggering an immediate CGT charge.
This could enable you to consider using their £3,000 annual CGT exemption. Consider their tax status, which may be lower than yours, before disposal.
They would inherit your original option price of 30p per share as their base cost and may then face CGT on any future gains when selling.
Once gifted as they are then the new owner of the money, they're free to decide what to do next, whether that's using the 'bed and Isa' process to fund their own Isa, make a pension contribution, or simply access the funds as they wish.
Finally, you ask whether this can be done without advice. The simple answer is yes—many organisations, such as Hargreaves Lansdown, are equipped to support this process and your employer may already have a company it uses.
However, if you are unsure about whether a particular investment wrapper such as an Isa or pension is suitable for your needs, it may be worth speaking to a financial adviser.
An adviser will assess your wider financial situation, not just the Sharesave scheme, and help explore appropriate options in depth.