Inherited Paper Shares and want to sell some... I have questions... Help please?

[KellyGarcia]

I inherited paper shares a few years back and we really need some money just now so I am thinking of selling some. I have NO idea how this all works but do know that everyone has a CGT allowance so I should be ok as long as I don't sell more than the allowance although I realise it is likely to be more complicated than that...

Do I need an IFA to help me do this or can I just go ahead and sell them? The certificate has instructions on how to sell them over the phone through the share service that prints the shares certificate. So, I know how to sell them and could sell some myself technically no problem but I am worried about tax implications and stuff like that where I might be making mistakes that I don't realise.

Also, I know paper share certificates are not popular any more and have heard of "CREST" but I don't know if or how to change from paper to electronic shares and would I then have to pay someone to hold them for me???

I hate this. I have no idea what I am doing and can't afford an IFA to help me out unless I absolutely have to.

Thanks for any help. I am clueless about all this.

[veryconfusedatthemoment]

I also had paper shares and needed to sell them. It was a jolly nuisance. I had to open a sharetrading account with my bank (First Direct). That took up to 2 weeks and they are lovely and very efficient. I then had to send the paper share cert in - that had to go backwards and forwards to the registrar (who basically has the legal register of who the shareholders are) - that took up to another 4 weeks. Only then could I sell - online trading fee was £11.

I now need to do the same with US shares and am having to open another account, but with Lloyds this time. I would have used HSBC but they were crap. Lloyds will charge an annual fee, 1st direct dont seem to.

So try your bank first - they may not be the cheapest but you find out info, then you can shop around.

Re: capital gains tax: you do get an annual allowance for each tax year - it will be on the Inland Revenue site but is approximately £10-11,000. This is an ANNUAL allowance, so you could sell 5th April and 6th April and get 2 allowances. You need to find out what price you "acquired" the shares at (you would have been given that as part of the inheritance), apply an indexation amount (this will be on the Inland revenue website and basically increases the value of the shares by inflation), take the indexed figure away from the NET sales value (ie after selling costs) and this will give you your capital gain. Compare to capital gains allowance and this will tell you whether you need to pay tax or not. (keep the calculation for future reference).

Sorry long, and very detailed.

[KellyGarcia]

Wow! Thanks for that! It is a lot of hassle isn't it?
I am a bit lost with the indexation amount and how to do the calculations... So if I sell an amount less than the annual allowance, I don't have to do anything but if I sell over the CGT amount I have to declare it via Self Assessment but I would therefore have to register in order to do so? I am lost...

Thanks so much for being detailed though! THat is what I need :)

[NichyNoo]

I have just been looking through these pages for the answer to the same question. DH inherited shares back in 2002. We diligently collect the dividend receipts every quarter but other than that have no clue what the shares are (or even if we have all certificates....we seem to receive dividends for shares we don't have a certificate for).

We now want to sell and have no idea how to do this.....it sounds like a right hassle and the CGT issue just makes it even more complicated. No idea what they were worth when we inherited them and even then we gifted half of them to a family member who was left out of the inheritance in the interests of fairness. Such a mess......

[PigletJohn]

The dividend vouchers will have the name and address of the registrar. Write to them saying your shareholders reference number (preferably attach a photocopy of a recent dividend voucher) and say you have lost the share certificates (if you have) and want to sell them. Ask if they have a Shareholders Dealing Scheme. If they do, it might be cheaper than alternatives. You might have to pay for copy certificates, or you might have to pay for an indemnity. The registrars will have a form for it, it's very common. If they don't have a dealing or custody scheme, you will need the certificates whicjh you can send to a share dealing company having previously opened an account. i don't think in your case you need a stockbroker. You certainly don't need an IFA.

I use Alliance Trust who will move your certificated shares into their nominee scheme free, and you can then sell them for IIRC £12.50 per deal online. There are other share deal companies.

Yoi will not be able to sell your shares until either you have got certificates, or the registrar offers a scheme and you have joined it.

Of course it is possible that the shares are worth keeping.

As a rue of thumb I'd say that any shareholding worth less than £1k you should either add to, or sell.

the registrars might have a Dividend Reinvestment Scheme which means that your shareholding grows without any effort on your part.

[Maursh]

Firstly, paper shares don't really exist anymore. Everything was converted to electronic format about a decade ago. The fact that you hold a physical stock certificate simply means that the shares are held (electronically) with the share registrar rather than with a custodian bank.

Most registrars have trading facilities so you are able to sell the shares directly through them, however the dealing rates are not very competitive ( I heard about GBP 50). You can transfer the shares to a custodian bank (as it sounds like veryconfused atthemoment did with first direct), however some registrars charge a fee for this as well.

I would suggest that you initially contact the registrar and find out what your options are and how much they cost in terms of either selling or transferring out. You might consider transferring out everything, provided it is not prohibitively expensive, to a trading service (custodian) so that everything is in one place, dividends are managed and you can sell as soon as you need to in the future.

I know more about share dealing than I do about probate, but concerning CGT, I recall that you initially complete an estimated value of an estate for the inland revenue. I would suspect that this is a guide to the initial value of the investment.. And of course you have an allowance per year before any tax is payable so you need to be holding quite a bit in investments before you need start worrying about tax. I am sure that there is heaps of readily available information about this on the inland revenue website.

[AuntPepita]

Don't worry about indexation, it doesn't exist anymore for individuals. Your £10,900 allowance is to cover the gain, not the proceeds. So take what you sell them for, less what you bought them for. If it is below 10,900 you pay no tax. Your DH will also have the same allowance and as long as you are married you can transfer them between you with no tax.

[AuntPepita]

Sorry, you inherited them, in which case what they were worth when the person who left them to you died rather than what they cost you to buy.

[shechameleon]

Just to quickly add that indexation allowance has not been available for many many years.

To work out your taxable gain just take your net sale proceeds (after commission) and deduct the value of the shares at the date you inherited them. This will give you your capital gain chargable to tax. If this figure is less than £10,900 then you will have no tax to pay.

If your gain is more than £10,900 you could consider transferring shares to your spouse and then you would both have an annual allowance of £10,900 each to use before incurring tax (usual caveat that gift of shares to spouse must be free of strings etc ie has to be a genuine gift to your spouse).

[filingdrivesmemad]

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