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Daily Mail
5 days ago
- Business
- Daily Mail
I have £30,000 in a Sharesave scheme: How can I avoid tax when I sell the company stock?
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.
Yahoo
07-07-2025
- Business
- Yahoo
How to start investing with an employee share scheme
Share schemes offered at work can be a brilliant way to get into investing. However, they come in different guises — with very different risk profiles — so it's worth knowing exactly what's on offer, and whether it suits you. There are two types of "all-employee" scheme. The most well-known are SAYE schemes — otherwise known as Sharesave. They've been around since 1980, so tend to be the first kind people think of. They start out as savings plans. You can save up to £500 a month for a fixed period of three or five years into a specific savings account. At the end of this time, you might get a tax-free bonus on your savings. At that point, you can buy shares with the proceeds. The key here is that the price of these shares was fixed when you started saving — and can be up to 20% cheaper than the share price at the time. It means that if the share price has risen above the fixed price, you can buy them and either hold them or sell them for an immediate profit. So, for example, at the start of the scheme, the shares might be worth £1 each, but your fixed price is 80p. During the next three years the share price rises to £2, so you can buy and sell on the same day and make £1.20 per share. Read more: How to save money on your council tax bill Alternatively, if the fixed price is higher than the current share price, you can simply withdraw your savings and any bonus. So if, in the same scenario, the share price has fallen to 50p after three years, you just take your savings back. For anyone who has been tempted to invest, but is worried about taking a risk, this offers the best of all worlds, because there's the potential of growth, with the fallback of your money back. If you're considering joining an SAYE scheme, it's vital to consider what you'll do at the end of the scheme. If you buy and sell the shares for a profit immediately, you're not taking any investment risk. If you are planning to hang onto the shares, it takes on a completely different risk profile, because you're holding single company shares in your own employer, which only makes sense if you already have a diverse portfolio. Share Incentive Plans (SIPs) are less well-known than SAYE, because they started in 2000, but they're offered by more companies. In 2023/24 there were 830 companies running SIPs and 520 running SAYE in the UK. In many cases, they simply let you buy shares in the company you work for tax-efficiently. Each year, you can buy up to £1,800 worth of what's known as partnership shares. You buy them out of your pay before tax and national insurance, and they go into a trust. This benefit isn't to be sniffed at, especially for higher and additional-rate taxpayers, who stand to make a substantial saving. As long as the shares stay in the trust for at least five years, you keep these tax perks. However, over that time, the price will rise and fall just like shares you buy any other way. There are other, more generous, versions of the scheme that your employer can offer. They can give you free shares — worth anything up to £3,600. They can also offer matching shares of anything up to buy-one-get-two-free. Read more: How to avoid finance scams on social media Finally, they might also allow you to spend any dividends on these shares on buying more company shares within the scheme. However, partnership shares remain the most common version. The SIP is less of a no-brainer, because there's a chance that during the five-year period, the share price drops to below what you paid for them — even taking the tax saving into account. You're effectively taking the risk of investing in single company shares with your employer from day one, so you need to consider if it makes sense with the rest of your portfolio. You also have to hold the shares — and stay with your employer — for five years in order to get the tax breaks or keep any free shares. If you opt to join either of these schemes, it's a good idea to think about tax. Once you've held shares in a SIP for five years, they'll effectively come out of the scheme, and any further growth could be subject to capital gains tax, and dividends to dividend tax. Sharesave shares, meanwhile, follow all the usual tax rules once you buy them. However, with both, you can transfer the shares into an ISA within 90 days and protect them from more: Key questions to ask yourself to plan for a comfortable retirement What is pre-application planning and can you do it yourself? Why you can trust an 18-year old with their junior ISA – and how to create one
Yahoo
07-07-2025
- Business
- Yahoo
How to start investing with an employee share scheme
Share schemes offered at work can be a brilliant way to get into investing. However, they come in different guises — with very different risk profiles — so it's worth knowing exactly what's on offer, and whether it suits you. There are two types of "all-employee" scheme. The most well-known are SAYE schemes — otherwise known as Sharesave. They've been around since 1980, so tend to be the first kind people think of. They start out as savings plans. You can save up to £500 a month for a fixed period of three or five years into a specific savings account. At the end of this time, you might get a tax-free bonus on your savings. At that point, you can buy shares with the proceeds. The key here is that the price of these shares was fixed when you started saving — and can be up to 20% cheaper than the share price at the time. It means that if the share price has risen above the fixed price, you can buy them and either hold them or sell them for an immediate profit. So, for example, at the start of the scheme, the shares might be worth £1 each, but your fixed price is 80p. During the next three years the share price rises to £2, so you can buy and sell on the same day and make £1.20 per share. Read more: How to save money on your council tax bill Alternatively, if the fixed price is higher than the current share price, you can simply withdraw your savings and any bonus. So if, in the same scenario, the share price has fallen to 50p after three years, you just take your savings back. For anyone who has been tempted to invest, but is worried about taking a risk, this offers the best of all worlds, because there's the potential of growth, with the fallback of your money back. If you're considering joining an SAYE scheme, it's vital to consider what you'll do at the end of the scheme. If you buy and sell the shares for a profit immediately, you're not taking any investment risk. If you are planning to hang onto the shares, it takes on a completely different risk profile, because you're holding single company shares in your own employer, which only makes sense if you already have a diverse portfolio. Share Incentive Plans (SIPs) are less well-known than SAYE, because they started in 2000, but they're offered by more companies. In 2023/24 there were 830 companies running SIPs and 520 running SAYE in the UK. In many cases, they simply let you buy shares in the company you work for tax-efficiently. Each year, you can buy up to £1,800 worth of what's known as partnership shares. You buy them out of your pay before tax and national insurance, and they go into a trust. This benefit isn't to be sniffed at, especially for higher and additional-rate taxpayers, who stand to make a substantial saving. As long as the shares stay in the trust for at least five years, you keep these tax perks. However, over that time, the price will rise and fall just like shares you buy any other way. There are other, more generous, versions of the scheme that your employer can offer. They can give you free shares — worth anything up to £3,600. They can also offer matching shares of anything up to buy-one-get-two-free. Read more: How to avoid finance scams on social media Finally, they might also allow you to spend any dividends on these shares on buying more company shares within the scheme. However, partnership shares remain the most common version. The SIP is less of a no-brainer, because there's a chance that during the five-year period, the share price drops to below what you paid for them — even taking the tax saving into account. You're effectively taking the risk of investing in single company shares with your employer from day one, so you need to consider if it makes sense with the rest of your portfolio. You also have to hold the shares — and stay with your employer — for five years in order to get the tax breaks or keep any free shares. If you opt to join either of these schemes, it's a good idea to think about tax. Once you've held shares in a SIP for five years, they'll effectively come out of the scheme, and any further growth could be subject to capital gains tax, and dividends to dividend tax. Sharesave shares, meanwhile, follow all the usual tax rules once you buy them. However, with both, you can transfer the shares into an ISA within 90 days and protect them from more: Key questions to ask yourself to plan for a comfortable retirement What is pre-application planning and can you do it yourself? Why you can trust an 18-year old with their junior ISA – and how to create oneSign in to access your portfolio
