Get tax savvy
Learn more about Capital Gains Tax and tax allowances
Important information - the value of investments can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity's advisers or an authorised financial adviser of your choice.
Find tax taxing? It needn't be.
Generally, when you are awarded company shares, they are held in a regular investment account, as government rules mean they cannot be placed into a tax-efficient account (like an ISA), unless you hold shares from a Sharesave or Share Incentive Plan. We can help you understand the Capital Gains Tax (CGT) implications and some potential ways to mitigate these.
Did you know you could keep more of your money by moving your shares to cash and then investing in a tax-efficient account to make the most of your annual tax allowances?
It's certainly worth thinking about.
Capital Gains Tax and investing
If your investments aren't held in a tax-efficient account (like an ISA) you'll have to pay Capital Gains Tax (CGT) when you sell your stocks, funds, investment trust or exchange-traded funds if the profit is over the CGT allowance. For the 2024/25 tax year the CGT allowance is £3,000 for individuals and personal representatives.
As your company shares are likely to be held in an investment account, you might want to consider a few ways to reduce the potential tax that may apply. See our top tips below.
Ways to reduce CGT
Here are a few ways to potentially reduce your CGT liability:
- Sell in stages - so that you can use each tax year's CGT allowance if gains are more than £3,000 each year.
- Make use of losses - you can potentially reduce your CGT liability by using losses to offset your gains. Gains and losses in the same tax year can be offset against each other, reducing the amount of gain subject to tax. Any unused losses from previous years can be carried forward, as long as they're reported to HMRC within four years from the end of the tax year they were disposed of.
- Transfer your shares or investments to a spouse or civil partner - as these transfers aren't subject to CGT as long as it's an outright and genuine gift. This essentially doubles the CGT exemption for married couples and civil partners as it allows each partner to use each other's annual CGT exemption. Learn how to transfer your company shares.
- Invest in an ISA by 'Bed & ISA' - Any gains you make in an ISA are tax-free. Your 2024/25 ISA allowance is £20,000. If you want to open an ISA, you can 'Bed & ISA' which involves selling your company shares (which will realise gains and you may pay CGT) and rebuying them. Any future gains will then be tax-free, including CGT. If you Bed & ISA your investments you'll be out of the market (which could have a negative effect on your investments) and there may be associated costs involved. Learn how to Bed & ISA.
- Save as you earn (SAYE) or Sharesave shares - if you have taken part in this type of share scheme through your work payroll, at the end of your savings period (3 or 5 years) you can decide to buy and hold on to your shares. Why not choose to place them straight into a tax-efficient Stocks and Shares ISA as no CGT will apply when you sell them, plus any growth or income is tax free too.
How much CGT could you pay?
The first step is to work out if you’ll be affected by CGT.
To do this you need to work out the difference between what the share price was when you got them and then sold them for.
For share awards administered by Fidelity SPS in the US you can find out the share price by calling the NetBenefits team.
So, if you sold £25,000 worth of shares that you bought - or were awarded to you - at £20,000 your gain would be £5,000.
Next, subtract the CGT allowance (£3,000) from your £5,000 gain/profit.
This leaves you with an overall profit of £2,000 which you'll have to pay CGT on.
How much CGT you have to pay depends on your taxable income.
If you're a basic rate tax payer, the gain you make over the allowance threshold on shares, funds and investment trusts is taxed at 18%.
For higher and additional tax bands this rate increases to 24%.
So in the example above you could pay £360 if you are a basic rate tax payer. As a higher rate tax payer you’d pay £480.
Wise up to your tax allowances
Deep dive into CGT
FAQs
Step 1
If you have an Investment Account or Stock Plan Investment Account with us, you will need to first sell your shares online as HMRC rules do not let you just transfer them to an ISA as they are.
Just log in, go to 'Manage Investments', and then choose 'Buy, sell, switch'. Once you have sold the shares, the cash will be paid into your Fidelity account. Please remember, your money will be out of the market for up to four working days, and this sale is taxable for Capital Gains Tax (CGT) if your gain/profit exceeds the annual CGT allowance.
Step 2
If you've already got an ISA you can then move this money from your Investment Account to your Cash Management Account, and then to your ISA when you're ready and buy back your shares or choose other investments to help spread your risk. Log in to move your cash.
If you've not yet got an ISA with us you can fill out a Bed & ISA form to move the cash into a new ISA. Just complete the form and upload it by logging in and going to 'Documents & Messages' and then 'Upload forms and documents'. We will confirm when your new ISA is open so you can then choose where to invest this cash.
To transfer your company shares, you'll need to fill out a Stock Transfer Form.
You can use a Stock Transfer Form for these transfers only:
- A transfer to your spouse or civil partner
- A gift to someone else with no payment involved
- Part of a divorce settlement
- A transfer after appointing a new trustee to a trust
- A transfer from a trust to a beneficiary of that trust
- A transfer from one nominee company to another without changing beneficial ownership
If the transfer includes US shares, the recipient will need a valid W-8BEN before the transfer.
Simply log in to your account and go to 'Documents & Help' in the main menu. Click on 'Upload forms and documents'. Read the instructions and then choose 'Stock transfer form' and click on 'Download now'.
You'll need to print, complete and sign the form before scanning it and uploading it using the scan and upload tool. Once uploaded, we'll let you know when we've completed your instruction.
Our Stock Transfers Guide: What you need to know gives more information.
Help and support
Please choose from one of the numbers below:
SPS support in the US
Transferring your shares to Fidelity in the UK
Please note : Fidelity International and Fidelity Stock Plan Services, LLC are separate companies that operate in different jurisdictions through their subsidiaries and affiliates.
