Company Shares - IPO

[airedailleurs]

Hi hope someone can advise me on the following please:

I was working for a company last year that is planning an IPO sometime next year. Before I left, employees were given the opportunity to buy quite a large number of shares for a nominal fee. Basically I would like to know how to profit as much as possible from the listing but don't have a clue how it works.

TIA

Did you buy the shares?

If/when the company lists the market will determine the price. No one here can tell you what the market price will be. Or have I misunderstood?

Hi yes I did buy the shares and I realise it's impossible to predict the share price but am asking about the procedure. For example could I just sell all my shares immediately and keep the profit after tax? Sorry but am clueless!

Yes

Generally this would count as a capital gain. You have about 10k tax free each year. Any gains over that are taxed at up to 28 per cent

There may be other rules for employee share schemes that apply too

Tap cat is right - it will be taxed as a capital gain. Whether you can sell immediately will depend on the terms under which you were granted or purchased the shares - it's not clear if they are shares or are they options? Check any paperwork/invitation letter you received.

You have £12k CGT allowance per year, as will your spouse, so you could transfer some to a spouse to utilise their allowance too. Share sale CGT rates for annual gains above the allowance are currently 10% and 20% for standard and 40% income tax rate payers respectively.

I have definitely bought shares not options, and thanks for your replies.

Who is holding the shares now? Are they still with the company or have you put them in a brokerage account with an investment company?

Shares for employees can be really complicated from a tax perspective. If the shares were unlisted then it is likely that there's no PAYE or NICs due as they probably won't count as a readily convertible asset. See here for a bit more detail: www.gov.uk/guidance/non-cash-pay-shares-commodities-you-provide-to-your-employees

They may be a readily convertible asset however depending on how close to the IPO they were issued.

I know you say they were definitely shares not options, but are you sure they weren't issued as part of an EMI scheme?

Capital gains as PP have said will be due on the difference between cost and the price you sell at, and you can use your annual exemption for this.

Just reread and seen that the shares were bought last year and planned IPO is next year - ignore the PAYE thing

The shares are held in a brokerage account, they were transferred there directly upon purchase. I guess I should ask the investment company in that case. It's quite exciting as I could end up making quite a lot of money but I want to handle it as well as possible.

Thanks for your help!

Update - the planned IPO did not take place earlier this year due to poor market conditions. It's postponed. Can anyone please advise me what my rights are re the shares I own? In a worst-case scenario if the company is just wound down would I lose my money?

Many thanks in advance.