To ask how to claim back Capital Gains Tax? Please help

[Thehonestbadger]

So I’ve never dealt with this before.
I worked for a big company and they offered a share match scheme.
I paid into it and the whole value ended up around 5000.

I recently left as I’m now needed as a carer for my disabled child. I cashed it out and received 3500 whilst they automatically deducted 1500 from me for taxes.

I only earnt 6500 this entire tax year as worked part time on a low wage. I now won’t earn anymore so I’m well bellow my personal allowance and obviously that 1500 they took in taxes would make THE WORLD of difference to my family.

I can not reach HMRC, every time I ring I end up on hold for over an hour even if I call first thing when they open (not doable with two toddlers one with high needs) but I’ve done my best. Only once have I managed to actually get through to someone and they immediately hung up on me.
I can’t find any clear answers on the website and I just want to cry. I feel like they just stole my money.

How much did you pay in? It isn’t clear.

How did they pay you and how did they deduct tax? Was it via your payslip? Are you sure it's capital gains tax they've deducted and not income tax and/or national insurance. Very difficult to know what's happened here, and until we have some facts, no one can give you any answers, not even HMRC who won't know what's happened either as they see VERY basic data via payroll. Tax is all about the detail, so please give more facts/detail and then people can help you.

If you cash out on my employees share scheme early, then you have to pay the tax and ni that you didn't pay when the amounts were deducted from your payslip.

Could it be that? You are getting taxed now on the earnings that you put into the scheme?

@AlliwantforChristmasisgu
@Kazzyhoward
@Mummieslncorporated

I paid in £40 per month for 3 years. It vested shortly before I had to resign so it wasn’t ‘early’ as such but it was within the tax liability period. Had I been able to stay in employment for another 2 years it would have been fully tax free which is frustrating.

My understanding though is because I only earnt £6500 in the tax year I shouldn’t pay capital gains tax on any amount until I hit my personal allowance. Is that correct?

I can’t imagine the tax and Ni on a £40 per month contribution on what was already a pretty low salary has amassed to £1500

It was all done through global stock and rewards service and I did try asking about this and explaining I was low income..etc before they paid out but everyone I spoke to was American and they hadn’t a clue what I was talking about. I assumed I would have to take it up with HMRC

I also read somewhere that you can only claim it back within 30 days is that true? It’s already been a bit longer than that because I literally cannot get hold of them.

I think @Mummieslncorporated is correct. I cannot see how this can be Capital Gains Tax. I think they have taken out the tax you would have paid over the last three years if you hadn't put the money into the scheme. The tax deducted would be a combinaton of Income Tax and National Insurance. I am not aware of any 30 day deadline.

Also don't ever bother trying to contact HMRC on a Friday - I have never had any luck! Try this link and follow the steps to claim a refund:

www.gov.uk/claim-tax-refund

@Unicorn1919

You might be right but I just feel like that’s a huge amount of extra tax/ni on a £40 per month payment. It’s the same amount total.

i didn’t get tax/ni relief on paying into the share saver, I remember very clearly that, so why would they tax/ni penalty me?

You're paying the tax you would have been liable for at the point in time the share was purchased. If it was a matched share scheme and you were putting in £40 a month (that you didn't pay tax and NI on), then your employer would have put in £40 as well, that would not have had tax or NI deductions.

But as you are drawing it before the entitlement period it means you're liable for the tax and NI on essentially £80 per month not just the £40 you put in, as you're getting paid the £40 your work put in that also wasn't taxed/NI'd.

I appreciate you may have been desperate for the cash, but as a note to others reading this, if you can avoid selling shares from this sort of scheme before the funds become tax free, do everything you can to avoid cashing in!

It will be income tax, not capital gains tax. If you check your payslip for the month you should be able to see the narrative for the deductions.

You can call HMRC to tell them your income for the tax year will be less than the personal allowance and they will send you a repayment. You might be able to do this online on your Govt Gateway account too, worth checking.

Some will be NIC and you wont be able to reclaim that unfortunately.

I am a tax adviser ☺️

@Thehonestbadger you say you didn't get tax/no relief on the share purchase scheme but are you sure? It seems odd this deduction wouldn't have been made from gross, I could be wrong though it's been ages since I was involved in something like this.

I do know some share schemes do involve capital gains tax implications when you sell your shares....EMI share schemes at 10% capital gain tax for example.

From what you posted here it sounds like a scheme where if you’d left your money in it would have been subject to CGT rather than income tax, but you didn’t, so income tax has been applied because of your earnings in that month. Over the year you will have overpaid tax and it would normally be adjusted through your tax code next year, but if you don’t earn enough to pay tax then that won’t work. I think you might have to fill in a self assessment tax form to reclaim it, but that will also be next year.

@Eastereggs1
i just checked my P45 and it shows 0 tax paid for this tax year at the point I left.

could it have processed after I left. I received the money from the share sale shortly before I received my P45

@HermioneWeasley

meant to also tag you above

Can you remember the type of scheme it was or have you got any paperwork to check, either from now or when you signed up to the scheme?

If your P45 is showing zero tax and you think you’ve been taxed you need to speak toy your payroll team

It's entirely possible it was processed after you left.

If you create a personal tax account online you'll have access to your records. I don't know how long it takes now, when I registered some years ago you did have to wait for codes to be posted. But it gives you more control as you have more information.

Details here www.gov.uk/personal-tax-account

@Eastereggs1
@HermioneWeasley

It says I paid income tax which is why I’m confused as hell over why my P45 says I’ve paid no income tax. I’ll email my Payroll department. I’m guessing I won’t be able to claim it back till April though? Not the end of the world as long as I do eventually get it back.

It's unlikely this would have been processed with your payroll. This would be dealt with as a separate, standalone thing.

As long as you still have some tax allowance left at the end of the financial year, you will be able to get some or all of the tax back. National insurance is calculated differently and you are unlikely to get that back.

There are schemes where the shares purchase is deducted before your income tax for the month is calculated. You have to keep these shares for a minimum period or pay back the tax you would have paid. It looks like this is what it was.