In our weekly series, readers can email any questions about their finances to be answered by our expert, Rosie Hooper. Rosie is a chartered financial planner at Quilter Cheviot and has worked in financial services for 25 years. If you have a question for her, email us at money@inews.co.uk.
Question: My sharesave at work is about to mature and the good news is I will be making a considerable gain. The downside is I am a higher-rate taxpayer. What can I do to mitigate the capital gains tax (CGT), please?
Answer: That’s a great position to be in, even if the tax side takes a little of the shine off it.To give a brief explanation for those not familiar, sharesave, sometimes called save as you earn (SAYE), involves a company offering its employees the right – known as the option – to buy shares in the company at a future date. You can get a discount on the current price.
A sharesave maturing with a healthy gain is a good problem to have but you are absolutely right to be thinking about CGT early. This is one of those situations where a bit of planning in the right window can make a real difference to how much you keep.
The first thing to understand is how the tax works. When your sharesave scheme matures and you exercise the option, you can usually buy the shares without paying income tax or national insurance on the discount. The tax only becomes an issue later if and when you sell the shares and realise a gain.
