shares

[brookie]

right i cashing some shares in later this year and just want to know the rules on paying tax on them. I put £7200 and looking to get just over £00000 back from them any help would be good .

[Doobs]

right i cashing some shares in later this year and just want to know the rules on paying tax on them. I put £7200 and looking to get just over £00000 back from them any help would be good .

You don't pay tax if you lose £7200.

[claypole]

Good work Doobs lol - I am trying to work out if he meant £100000 or £10000 - sick brag if former

[Doobs]

Clearly invested in RBS

[BulldozerD]

You have annual CGT exemption of £10600. So if your gain (proceeds less cost) is less than that you have no CGT to pay.

[redsimon]

Did you buy the shares as an ISA? Just wondering because £7200 was the Stocks and Shares ISA contribution limit in 2008/2009. If it was in an ISA no Tax is payable.

[brookie]

You have annual CGT exemption of £10600. So if your gain (proceeds less cost) is less than that you have no CGT to pay.

thank u that all i needed

[brookie]

Good work Doobs lol - I am trying to work out if he meant £100000 or £10000 - sick brag if former

wish it was 100000 lol

[brookie]

Did you buy the shares as an ISA? Just wondering because £7200 was the Stocks and Shares ISA contribution limit in 2008/2009. If it was in an ISA no Tax is payable.

dont think so no buddy

[brookie]

it shares in the place i work NEXT,i got them just over 2.5 years ago and payed £17.84 each for them i put £200 a month out off my wages each month so £7200 and 404 shares, there are at £40.50 ish now so when i cash them in i will get around £16k  back not till november

[Geo the Sarge]

Sounds like an employers sharesave scheme to me, this is totally different I think.

Shares are "locked in " for 3 years, thereafter you can cash them but they are subject to Tax and NICS

After 5 years the Tax and NICS is not payable.

Be aware also that most companies run these through an administrator, Equiniti seems to be the largest one and their charges for withdrawing are quite hefty.

Worth taking a look here and also checking with your payroll team who the administrators are as you will probably have to register online to be able to make the withdrawal. My wife and I have similar with our employers and cashed some in a few years ago, even though they were past the 5 years and no tax or nics applied we still got nowhere near the true value of the shares due to charges, it was a nightmare tbh.

You'll get some idea here, not all of it necessarily relevant as it depends which type of scheme they are bought in
 
http://www.shareview.co.uk/Employees/Pages/ShareIncentivePlan.aspx

Geo

[MLHMLH]

I think he's on about a share option scheme (Sharesave scheme), which Next definitely offer to their employees, according to their website.  Luckily I have some expert knowledge on this subject as I worked in Halifax's Sharesave department for 8 years!  This scheme is approved by HMRC and therefore income tax and NICS are NOT payable on any profits from the sale of your shares.  However you do have to pay Capital Gains Tax on any profit, however you have an annual CGT Allowance of £10,600 (2013/14) - this is important, I'll come back to this in a minute.

When the scheme matures you have 2 options.  Right now, you DO NOT own these shares.  Instead Next have simply given you the option to buy the shares when your scheme matures in Nov 2013 (as long as you still work for them at that point).  When it gets to November you can either take back the cash you have saved (£7200) or take up your option to purchase the shares using the £7200 saved, at the share option price agreed by HMRC (which would have been set at the beginning of the scheme, usually market value less 20%) which in your case is £17.84.  If the Next market share price has gone down below £17.84 when the scheme reaches maturity (Nov 2013) then you may have to put some thought into your decision, because if you took the shares and then immediately sold them, you would effectively make a loss.  You of course don't HAVE to sell your 404 shares straight away.  Once the scheme matures and you decide to take the shares (and not the cash you have saved) then you own those shares and they are yours to do whatever you want with.  You can keep them and sell them years later, sell some of them and keep some, or sell all of them immediately, it's totally up to you.  

Obviously if the Next share price has risen above £17.84 in Nov 2013, it's a no-brainer decision.  You must take up your option to buy the shares.  They will send you a maturity form to complete.  There are 2 decisions to make.  Decision 1 relates to taking up your share option, which you obviously must do.  Decision 2 relates to whether you would like to sell all or some of your 404 shares immediately or keep them (you will receive your shares within a few days if you choose to keep them).  This decision is more complicated & will determine whether you have to pay Capital Gains Tax (CGT) on the proceeds of the sale of your shares.  The Next share price may keep increasing after Nov 2013 and if this happens and you've kept the shares, the value of those shares continues to increase and you could then sell them for their market value in a few years time and make even more money!  From what I remember about 95% of people who take part in these schemes sell all of their shares immediately, but in your case it is going to be very dependant on what the actual share price is in November.  Here's why!  The cost of the shares to you was £7200.  Let's say in Nov 2013 the current Next share price is £40.50 (it could be higher, it could be lower, a lot can happen between now and November), then your 404 shares would have a value of £16,362.  If you were to sell all your shares on maturity for £40.50 per share, your Capital Gains Tax liability is worked out as follows: Sale proceeds (£16,362) minus Cost of shares (£7200) = £9,162.  If this amount is less than £10,600 (CGT allowance) which it obviously is, then you would pay NO CGT on the sale of your shares (unless you had already used some of your CGT allowance in 2013/14).  However if the market value of Next shares has increased to £45.00 by November, the calculation would be as follows:  Sale proceeds (£18180) minus Cost of shares (£7200) = £10,980.  You would have a CGT liability of £10,980 minus £10,600 (allowance) = £380.  The rate of CGT for basic rate taxpayers is 18%, so you would have to pay tax on the proceeds of the sale of £68.40 (a very small tax bill on such a large profit).  You could sell the vast majority of the shares immediately to ensure your profit on the sale does not exceed £10,600 in 2013/14.  You then keep hold of the remaining shares until 6th April 2014 and then sell them, because from 6th April 2014 you get another years allowance of £10,600 for CGT.  

So, if the market price of Next shares in November 2013 is less than £44.07, you can sell all the shares immediately without incurring any tax whatsoever (as long as you haven't used any of your CGT allowance between 6th April 2013 & November).  Happy days!!!

If you have any questions please feel free to ask!  

Michelle
 

[brookie]

I think he's on about a share option scheme (Sharesave scheme), which Next definitely offer to their employees, according to their website.  Luckily I have some expert knowledge on this subject as I worked in Halifax's Sharesave department for 8 years!  This scheme is approved by HMRC and therefore income tax and NICS are NOT payable on any profits from the sale of your shares.  However you do have to pay Capital Gains Tax on any profit, however you have an annual CGT Allowance of £10,600 (2013/14) - this is important, I'll come back to this in a minute.

When the scheme matures you have 2 options.  Right now, you DO NOT own these shares.  Instead Next have simply given you the option to buy the shares when your scheme matures in Nov 2013 (as long as you still work for them at that point).  When it gets to November you can either take back the cash you have saved (£7200) or take up your option to purchase the shares using the £7200 saved, at the share option price agreed by HMRC (which would have been set at the beginning of the scheme, usually market value less 20%) which in your case is £17.84.  If the Next market share price has gone down below £17.84 when the scheme reaches maturity (Nov 2013) then you may have to put some thought into your decision, because if you took the shares and then immediately sold them, you would effectively make a loss.  You of course don't HAVE to sell your 404 shares straight away.  Once the scheme matures and you decide to take the shares (and not the cash you have saved) then you own those shares and they are yours to do whatever you want with.  You can keep them and sell them years later, sell some of them and keep some, or sell all of them immediately, it's totally up to you.  

Obviously if the Next share price has risen above £17.84 in Nov 2013, it's a no-brainer decision.  You must take up your option to buy the shares.  They will send you a maturity form to complete.  There are 2 decisions to make.  Decision 1 relates to taking up your share option, which you obviously must do.  Decision 2 relates to whether you would like to sell all or some of your 404 shares immediately or keep them (you will receive your shares within a few days if you choose to keep them).  This decision is more complicated & will determine whether you have to pay Capital Gains Tax (CGT) on the proceeds of the sale of your shares.  The Next share price may keep increasing after Nov 2013 and if this happens and you've kept the shares, the value of those shares continues to increase and you could then sell them for their market value in a few years time and make even more money!  From what I remember about 95% of people who take part in these schemes sell all of their shares immediately, but in your case it is going to be very dependant on what the actual share price is in November.  Here's why!  The cost of the shares to you was £7200.  Let's say in Nov 2013 the current Next share price is £40.50 (it could be higher, it could be lower, a lot can happen between now and November), then your 404 shares would have a value of £16,362.  If you were to sell all your shares on maturity for £40.50 per share, your Capital Gains Tax liability is worked out as follows: Sale proceeds (£16,362) minus Cost of shares (£7200) = £9,162.  If this amount is less than £10,600 (CGT allowance) which it obviously is, then you would pay NO CGT on the sale of your shares (unless you had already used some of your CGT allowance in 2013/14).  However if the market value of Next shares has increased to £45.00 by November, the calculation would be as follows:  Sale proceeds (£18180) minus Cost of shares (£7200) = £10,980.  You would have a CGT liability of £10,980 minus £10,600 (allowance) = £380.  The rate of CGT for basic rate taxpayers is 18%, so you would have to pay tax on the proceeds of the sale of £68.40 (a very small tax bill on such a large profit).  You could sell the vast majority of the shares immediately to ensure your profit on the sale does not exceed £10,600 in 2013/14.  You then keep hold of the remaining shares until 6th April 2014 and then sell them, because from 6th April 2014 you get another years allowance of £10,600 for CGT.  

So, if the market price of Next shares in November 2013 is less than £44.07, you can sell all the shares immediately without incurring any tax whatsoever (as long as you haven't used any of your CGT allowance between 6th April 2013 & November).  Happy days!!!

If you have any questions please feel free to ask!  

Michelle
 

thank u that what i wanted and very well explained