Capital gains tax on share saving scheme

[UmberFatball]

Hi Mumsnet
Wondering if anyone can explain CGT to me like I'm in idiot.
We are currently saving £500 per month in my husbands work share save scheme and this is locked in for 3 years (so 36 months).
The share price is doing really well and is currently 3 times what we are buying in at.
When we come to cash these in at the end of the 3 years, what proportion will we have to pay CGT on? Is it the profit i.e. the total amount minus the £18,000 we will have paid in?
We are higher rate tax payers and definitely will need to take the money to clear some debts from house renovations. Any advice appreciated please!

Hopefully bump

Yes it’s on the gains so you’re correct, although at the moment there’s a £3k allowance so it will be the total minus £21k. This may all change in the upcoming budget though as Labour may change capital gains amount or rules so don’t rely on this.

It depends on the share scheme. There's a possibility that the proceeds will be free of all taxes if it's an approved scheme. You need to get and carefully read the scheme paperwork.

www.gov.uk/tax-employee-share-schemes/save-as-you-earn-saye

This is not strictly true with employee share scheme, it depends on which type of scheme it is. It should tell you ok the paperwork which type it is then I can let you know how any CGT is calculated.

You can also share CGT between couples, so can each claim £3k via your tax return

On our sharesave when we cashed it in and got the shares at the end, the CGT was only due if we sold the shares. Can you just sell the shares each year up to the CGT amount when you get them

Usually you'll have a breakdown of your options just before Maturity.

What I do know is:

• Capital gains is only on the profit, minus £3k
• You can transfer some shares to your spouse on Maturity to use their £3k capital gains allowance
• No capital gains are payable if you transfer the shares to a S&S ISA.

I have a sharesave due to mature next year with a circa £35k gain. I plan on putting £20k of shares into an ISA and transferring as many as possible to dh to lower the overall capital gains.

And I'm keeping my fingers crossed for the budget they don't increase the tax rate to 39% 🤢

Sorry just see you need the money so selling some each year might not be possible

Really helpful thanks all. We could possibly take out the money we paid in and use this to clear the first debt (to my parents so I'm keen to clear this), and then investigate the S&S isa too to overpay the bank loan faster than planned.
If he transfers £3K to me will I have to leave these as shares or can I cash them in?

Will obviously wait and see how the labour budget may change this! They don't mature for a year or so anyway

Sorry to jump on OP but what if the shares have matured years ago and just sat there…? Can one then transfer into a S&S ISA or anything to mitigate CGT or does it all have to be done at maturity?

@SushiParty likelihood is you'll have to pay CGT on any increase in value from the point your savings were used to buy shares (which is what you are describing as maturity I think), to the value of the shares when you sell them. I think you will now be too late to transfer to an ISA tax free. But well worth cracking on with considering selling before the budget as gains tax will almost certainly go up.

And I'm keeping my fingers crossed for the budget they don't increase the tax rate to 39%

That has specifically been ruled out this week - although that doesn't mean it won't rise to 38% of course!

Just trying to figure this out using the simplest example of tripling the value.

18000 x 3 = 54000
DH can take his 18000 + 3000 = 21000
Transfer 3000 to me
Transfer 20000 to a S&S isa

This leaves 10,000 eligible for paying CGT on if we sell (under current rules). So will need to pay £2000 in tax, and gives us another £8000 to pay off debts.
Is that right?

What time of the year do these shares come up, if Feb or March, might be worth selling in two lots, either side of the tax year

Op, you need to read your scheme documentation and the HMRC link. There will likely be no CGT if the shares are sold immediately after they are "purchased". They are not purchased until the end of the 3 year period - your savings are just sitting in cash with the company until then - so there may well be no gain, so no tax either.
But all this depends on the scheme. Anyone claiming to tell you the definitive answer without seeing your scheme paperwork is guessing.

Thank you I will have a rummage and see if I can find it 😊 just planning for the 'worst case' if we do need to pay CGT.

It ends in September so not near the end of the financial year unfortunately!

Hasn't? Where has this been stated? We're worrying about it at the moment.

@Overthebow well when asked about speculation that it would rise to 39% Starmer said that was "wide of the mark".
Obviously "wide" can be subjective, but I think it's pretty safe to say it will not be 39%.