Firstly, you may or may not know know but large multinationals often provide their UK staff with company shares which vest through the year as part of a compensation deal. I know of >5k people in my own employment and have friends in other large companies in this (tech: Meta, FB, Apple) and other sectors (banking: Morgan Stanley, etc) all with similar systems. This is likely at least 10k people if not many tens of thousands of high tax payers in the UK. No pressure HMRC Admin XX but your answer here is useful and important to thousands of us :) Feel free to escalate and confirm the official response.
The vests are taxed as income and about 47% of the stock is taken away for the maximum tax level. The remaining shares stay in the broker unless you sign up for an auto-sell option. Due to insider knowledge (materials nonpublic information), there are blackout windows for those selling manually and strict rules on the timing for when you sign up for "auto-sell" after which you can't cancel for a year either, so you have no control over the sales.
The vest and sales are in USD but as *some* of us (out of 10,000s of people) know how to do this properly we use the value of these stock in GBP at the vest/sale events (potentially using HMRC's provided monthly exchange guides). The vests are often monthly which is a pain because months vary between 28 and 31 days - this is important due to the 30-day B&B avoidance rule. (note: The brokers in question are typically in the USA have haven't got a clue about UK tax rules, the user interface shows irrelevant gain/loss based on specific shares, i.e. no knowledge of Section 104 mean - I know 1st hand that UK people don't understand this as this is all new and confusing to everyone who starts working in these companies).
Manual stock sales need tax calculations. (Note: over the years I've learnt via threads of misc email lists at work indicate a distressingly high number of tax accountants make mistakes or simply don't understand these US share systems and UK rules). Same-say/30-day and s104 matching are all taken into consideration etc. At least some of us sort this correctly, I can't speak for everyone. But I do know that almost nobody ever owes capital gains tax as most of us intentionally stay under the gain limits. A lot of us do however have to report because that's just 4x the gain limit. HMRC presumably receive 10,000s of tax returns containing £0 owed but pages of stock numbers.
Now we come to Auto-sell: So... when somebody signs up to this scheme, they receive the vest the same as everyone else, however in this case those "same shares" are then sold. They had no control over them, there is effectively no gain/loss reported by the broker - however... due to things like the US timezone and other administrative complications, the actual point the sale takes place is after midnight in the UK!!!!
So my question is whether HMRC consider this a same-day match, shares purchased and all of them immediate sold? People are very clearly following the spirit of the law here as there is no intent to gain/lose with sales which are out of your control.
If not, then it's a complicated mess. The purchase (vest) occurs, then a sale follows, the cap.gains is not calculable / documented. And before you comment that it'll clearly be under the £6k limit (from next month), for many earners it will also be over the reporting limit, even with £0 owed. The next vest might be 28-31 days away so on some months you need to match against the new vest and other times against a s104 pool! This is a messy nightmare impacting many people wanting to opt for auto-sell but scared to due to the tax mess.
**** Please can you tell me that it makes sense to consider auto-sold stock as same-day ? ****
Alternatively please consider escalating up to HMRC that the reporting limit is too low or should not be needed if the gain is clearly close to £0 - https://www.gov.uk/capital-gains-tax/work-out-need-to-pay
Assume I purchased shares worth £20k a few years ago which are now worth £40k.
According to https://www.gov.uk/tax-sell-shares and https://www.gov.uk/capital-gains-tax/gifts
I am allowed to donate half of those to my wife before we both sell them, so that we both only have £10k gains each this tax year. This is under the £12,300 gain limit and ~£49k reporting limit - no tax is owed.
How to donate:
I called my spouse over to my brokerage screen and nicely explained the donation, they excitedly agreed we should both sell our halves. I write a clear letter explaining this and upload the PDF to my next tax return for that tax year.
Or - convoluted:
I contact my broker and ask them about doing an actual move of the shares, they inform me I need to download a pdf, print it and fill it in in pen. I then need to *FAX* this to their (+1) US number!? ... and wait a few weeks before calling to see how it's going, they've lost it so I start again, they, like most of them are lacking in basic competence. My spouse in the meantime has struggled but eventually managed to open a brokerage account (with my help as it's complicated) sending off forms, ID etc etc and waits until they get an account number for the transfer. We wait weeks and finally the "donation" is made and we both sell. We've lost out some money with fees from both brokers which we validly discount against the gain (this can literally *decrease tax* that HMRC would get, e.g. if we over the limits and were set to pay, the banks/brokers gaining instead).
The tax outcome is the same but the effort required is bonkers. Furthermore no actual evidence is technically required for HMRC to see any of this if the reporting limits are under.
Please PLEASE can you confirm that a donation to one's spouse doesn't actually need to require weeks of arduous life-admin to do a "real donation" as they obviously equate to the same outcome? It would be very sensible if HMRC agreed that it's generally okay to assume that in matters of stock donations, that the higher earner effectively doubles their cap.gains limit due to being married, seeing as they could effectively donate half over each yearly gain - albeit with the effort.
Some tax adviser websites even have "just assume you double your capital gains limit due to being married" or words to that effect. So I'm sure this is occurring already.
My state pension forecast on the government gateway https://www.tax.service.gov.uk/check-your-state-pension/account
indicates I've contributed 29 years, but that in just *one* more year (possibly this 6th of April) I'll have qualified for the full £185.15 per week. My wife who is a bit older needs to work 4 more, which will be around 35 years. I know that the old system needed 30 years (I was at around 17-18), but we're now past 2016 and only the new pension applies as I'm just in my late 40s.
I can't find *any* reference anywhere as to why I only need to work for 30 years to get a full new pension. https://www.gov.uk/new-state-pension/how-its-calculated is difficult to understand and refers to a "starting amount" in 2016 but what could that have been?
It would be nice to know I can stop working in a few years and know that when I get to 67 I'll get the full supplement from the state on top of my savings, and private pensions. Is this in 1 month or 5 years?
This is not surprising, just based on the initial description I would assume you have been over taxed - which is fine and not really HMRC or your companies fault based on their knowledge of your employment, leaving in November rather than Mar/Apr is the clincher here.
You can apply for a government portal login and see it yourself, or phone HMRC (0300 200 3300) and wait on hold, they're often very nice & knowledgeable and can look up specifics for you based off your NI number. I don't know exactly how they'd return the money. It's worth noting that for the vast majority of people in the UK under PAYE (pay as you earn), this is all automatic and works itself out eventually. So the really easy/lazy option is to just continue working and it'll all pan out fine. If you're retired I'd call or do a tax return etc.
When you are earning an amount each month HMRC estimates what your yearly income will be over the tax year, between April and November. If we assume you were being paid locum work income amounts of £150 a day this is roughly an income of £38k per year and the tax on this each month would have been taken away. But you stopped in November, so you only worked 8/12ths of the time ~£25k (extrapolated over the year) which has much lower tax. I don't know your income figures but when I ran some numbers it was even more owed back, so I'm assuming locum work pays more than your normal base. Or they were unable to refund back enough tax yet and it needs more pay through further work.
I apologise, voice input messed up slightly. I can't recall what I meant instead of "at Inn your teaching". To clarify, watching your stock drop in value in the broker UI means nothing, unless you realised that by selling to cash or other stock.
Later, "Is this is the case" should be "If this is the case".
When you say "I am planning to hold on to these shares for some more time and plan to sell it in 2 years time", does this mean your stocks only had an effective loss of £24k in value from what your at Inn your teaching platform/broker, but you hadn't activated/realised that loss by selling into currency? Is this is the case this*isn't* a recordable loss that could be used later, it's just sad watching your stock be low for a while.
If you did sell but purchased the same stock back again, you'll have needed to wait for 30 days before the purchase or you're still not recording a loss due to bed and breakfast rules.
Note that I'm not a financial advisor so can't suggest when you should or shouldn't sell - I can generally quote common sense suggestions like "buy low, sell high" & "time in the market is better than timing the market".
The debate over intentionally generating a capital loss on poorly performing stock to sneak under the limit (or record a capital loss for future years), is an interesting one and I'm undecided on my own investments tbh. Most of my investments sucked this year with just a few outliers. If you've realised a good gain, you've made money! The tax on the bit over £12,300 is 20% (or 10% if you're a low earner).
If the tax owed is under £3k and you file the return by the 30th of December, you can tick a box to request this tax owed is made via PAYE tax code adjustments over the next year or two. I'd view this as an interest free loan from his majesty's revenue and customs!
A) Both US and UK. Note that the vest values and sale values need to be converted into GBP at those points in time for the UK tax. On the plus side there is a generous £12,300 tax free limit until this April.
B) In some countries stocks that are older have different tax levels, this is not the case in the UK. Actually all stocks purchased, have a value and are added to a single value, an average (mean) holding value known as the Section 104 holding (https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2019#how-to-work-out-the-gain-for-shares-in-a-section-104-holding). Even when you sell from your broker and it asks "old or new" that's irrelevant in UK tax and your choice was meaningless*
If you had a vest within 30 days of one of your sales, you need to read up on the 30 day rule. I'm afraid this whole thing is quite complicated.
C) There used to be some special share plans for specific UK shares in specific old-school UK companies, it's *extremely* unlikely from your description that your bank and its US share scheme are one of those approved schemes.
*Unless you head to another country that treats this differently in which case, utilise the UK's tax free limit and sell the oldest (deemed most valuable, outside the UK) 1st. All hope is lost if you're from the USA as you have to pay tax on gain in both the US and UK. The treaty doesn't work that well for that.
If you've sold within a tax year you may need to report that, being within the exchange doesn't matter it's not just when you withdraw. The value of shares in GBP will make up part of a Section104 pool average value, and there are matching rules depending on the times you sold and purchased which are complicated. I would recommend avoiding buying the same stock within 30 days if you want to make the calculations easier. Or rely entirely on the exchange's tax reporting feature to help provide the docs needed for the return.
You don't need to report if the volume of shares sold was lower than £49,200 and you didn't gain more than £12,300 (***this goes down to £24,000 and £6000 in April***).
If you made a loss, you still need to show your workings if the amounts sold were over £49k as mentioned. If they weren't you might still want to report this loss as you can use that years from now to offset later gains. IIRC you have ~3 years to declare a loss that you wish to use so you may have some from previous years too.
(Well done on gifting shares, this effectively doubles your capital gain allowance using your spouse)
You don't say whether the shares he purchased were the same. If they were then things like the 30-day rule would come into play if this was within that time period after the sale of the ones you gifted. If they were just different shares and then sold shortly after in order to put into an ISA instead, then all that has happened is creeping closer to the capital gains limit for this tax year.
He will have to declare, if the amounts involved are over four times the gain allowance. I.e. 12300×4=49200. This is just an annoying technicality, especially if the gain was well under the limit.
A lot of people deliberately try to stay just under the gain limit, but depending on the markets, making £12k gain may involve large amounts of money. What I do is put all the sums and a written explanation into a PDF and upload it with the tax return. I don't end up paying tax but annoyingly I have to go through the effort of telling them, and they have to go through the effort of auditing this... I think they should reconsider this rule.
Purchasing in an ISA does not require you to wait 30 days.
Under some circumstances it can be advantageous to utilise the 30-day rule repurchasing shares (outside the ISA wrapper). It changes what the sale shares are matched against to the ones you have just purchased again, rather than the potentially quite low/old section 104 holding mean. So I guess you could technically call this a disadvantage of purchasing in an ISA in some rare circumstances. Otherwise normally purchasing in the ISA is just a good idea & almost certainly in your case.