How can I avoid paying tax on my £70,000 of SAYE shares?

4 min Read Published: 10 Sep 2013
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 Reader Question:


I’ve very little knowledge on stocks/shares but I’ve been looking up on the internet to further the knowhow but I’m still drawing a few blanks in areas. I’m 29 years old and currently in my employer’s SAYE scheme, I opted for the full amount-£250 a month over 5 years. At the time of starting the scheme the shares were fixed at £0.25 a share. They are currently worth around the £0.90-£1.00 mark.

The scheme comes to an end this December when unless something crazy happens I will mature the option to take the shares.

The questions I have that I can’t seem to find answers for are:

When the scheme ends and I choose to take the shares is there any tax that i will pay? (not selling the shares at this point) as in booklet they gave me it mentions that under ‘normal circumstances you won’t pay any income tax on choosing the shares.’ I understand that if the company has been bought out within a 3 year period I may have to pay income tax, but that's not the case for me here. So is there any other reason why I would have to pay any tax on just choosing the option to take the shares??

Secondly -The amount of shares that I will be looking at getting is around the 70,000 mark (this including the tax free bonus pay taken as shares) now if I say the shares are worth £1 each at this time I would like to get out £50,000 asap without having to paying a dime to this government. I have a girlfriend that i’ve lived with for nearly 2 years. Is there any way I can give her shares without using my capital gains allowance? Or is the only way to be married?

So as I see it the best way I can sell the shares are:

  • Sell this year’s allowance and pay no CGT (£13,625-maxing the CGT of £10,900)
  • Start up a stocks/shares isa-and transfer the full amount £11,520 for this year.
  • I currently have a cash ISA that i set up a few years ago but not put anything into it this year. Do I have to close this before starting up the stocks and shares isa? Or can I have both running (just not put anything in the cash isa).
  • Come 6th April 2014 repeat the two processes above making the amount around the £50,000 mark.
  • Keeping the remaining 20,000 shares on the market. Knowing anything I do within the 2014-2015 tax year I will pay CGT on.

Now with regards to the Stocks and Shares ISA, being that I want the money, is there a limit on how long the isa has to be open before I can put shares into it? When I open it I understand that I only have 90 days to transfer the shares from the SAYE scheme. So would it make sense to wait say till about February 2014 to mature the scheme so I can transfer the first load of £11,520 shares from the scheme to the 2013-2014 isa and then do the same again in April 2014 with the new year's ISA allowance?? Staying within the 90 day period.

If and when the shares are in the ISA how do I get the money?? Do I close the ISA straight away and take the money or do I have to instruct someone to sell them for me and take the money out the ISA??

I know the above might be long winded but I can’t seem to find the answers to these questions so if you could help us out here please or at least point me in the right direction, any help would be much appreciated.


My response:


Wow that is a lot of questions. Obviously I can't give you specific tax advice but can answer your questions generically. But before I do I suggest that you download this excellent FREE guide on how to minimise your tax bill*. It is the best FREE guide I've come across and is regularly updated.

Right, on to your questions:

1) Firstly when you acquire the shares you don't have to have to pay income tax as long as it is a HMRC approved SAYE share option scheme.

2) Secondly, you can't transfer shares to your girlfriend (capital gains tax) CGT free. Only inter-spouse transfers are CGT free, so that puts a slight spanner in your plan.

3) It is possible to delay the purchase of SAYE shares up to six months after you complete your SAYE contract if, at that time, you are still employed by the company which set up the share option scheme. So in theory there is nothing to stop you delaying the purchase of the shares until nearer the tax year end to try and utilise your Stocks and Shares ISA allowances.

4) Each tax year you have an ISA allowance, which is £11,520 for the 2013/14 tax year. You can save up to £5,760 in a cash ISA with the remainder of your allowance put in a stocks and shares ISA. Alternatively you can use your full allowance towards a stocks and shares ISA. Previous cash ISAs and Stocks and Shares ISA accounts do not affect this tax year's allowance as long as you are no longer contributing to them, and you do not have to close them before using this year's ISA allowance.

5) As long as you can find a manager willing to accept your SAYE shares then there is nothing stopping you transferring shares equal to your ISA allowance into a Stocks and Shares ISA and eventually selling them yourself.

I hope that helps. I would also suggest that you read my article 'How to avoid paying tax on SAYE shares' and HMRC's official employee guidance on SAYE schemes. Finally, it might be wise to employ the services of a tax accountant given the large sums involved to ensure you don't fall foul of any tax rules.

Best wishes


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  1. Are you allowed to sell all of your initial investment in current tax year or just the percentage which relates to the £11,520 profit, in order to avoid CGT?

  2. Hi Damien (& readers)
    just one word of caution here.
    If you transfer the shares into an ISA this may be regarded as a disposal for CGT purposes, as technically the shares are sold & re-bought in order to transfer them.
    (This is the same as switching from an OEIC into an ISA and doesn’t usually result in a charge due to the ISA limit being similar to the CGT allowance)
    So you could find that this will mean that the option of also selling shares up to the CGT allowance is not available
    Before proceeding I would check with the online electronic trading platform that these sort of shares are normally held on to see what they think. They will have an ISA option

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