Get tax savvy
Learn what Capital Gains Tax is, when it applies and ways to reduce it
Important information - investment values can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and tax rules may change. This is not a personal recommendation for a specific investment. If you're not sure which investments are suitable for you, consult Fidelity's advisers or another authorised financial adviser.
Find tax taxing? It needn't be.
If you hold shares or other types of investments in accounts that are subject to UK tax, check whether Capital Gains Tax (CGT) could apply when you come to sell those shares or investments.
Accounts subject to UK tax include your employer Stock Plan Account or Fidelity International Investment Account.
You usually pay CGT if any of the gains you make from selling your investments are above your annual CGT allowance. Investments include shares, funds, investment trusts or exchange-traded funds.
In most cases, when you’re awarded company shares, government rules mean they’re held in a regular investment account that’s subject to UK tax. They can’t be put in tax-efficient accounts – like a stocks and shares ISA or self-invested personal pension (SIPP) - unless they come from a Sharesave or Share Incentive Plan.
We can help you understand how CGT might apply, and some ways you could reduce what you pay.
Moving your sale proceeds into tax-efficient accounts
Once you've sold your investments, you can move the sale proceeds (cash) into tax-efficient accounts – like a stocks and shares ISA, SIPP, junior ISA or junior SIPP - and invest it. You won't pay Income Tax or Capital Gains Tax on investments you hold in these accounts.
When you need to pay Capital Gains Tax
Each tax year (6 April to 5 April the following year) you have a CGT allowance of £3,000. This is also called the Annual Exempt Amount. If your total gains from selling investments or other assets are more than £3,000 in a tax year, you may have to pay CGT on the amount above this. Your taxable gain is your total gains for the tax year after you've deducted any allowable losses or reliefs. A capital loss happens when you sell something for less than you bought it for.
A few ways to help reduce your CGT bill
- Sell in stages
You could spread sales over more than one tax year. This lets you use your £3,000 allowance each year. - Make use of losses
You can offset gains and losses against each other in the same tax year, which reduces the amount that’s taxable. If you have unused losses, you can carry them forward to future tax years once you've claimed them. You normally need to claim or report losses within four years of the end of the tax year when you disposed of the asset. - Transfer your shares or investments to a spouse or civil partner
The transfer of assets between spouses/civil partners living together are typically treated as no gain/no loss for CGT. 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. Find out how to transfer your company shares. - Invest in an ISA using 'Bed & ISA'
Any gains you make in an ISA are tax-free. You can invest up to £20,000 in an ISA in this tax year. 'Bed & ISA' means you sell your company shares and then buy them back inside an ISA. See what shares and other investments are available with Fidelity International on Investment Finder. When you sell your shares, you may have to pay Capital Gains Tax. But once the shares are in your ISA, any future gains are tax-free. This includes CGT. If you use Bed & ISA, your money will be out of the market for a short time. This could affect the value of your investments. There may also be fees. Find out how to use Bed & ISA. - Invest in an ISA using shares from your Stock Plan Account
If you have cash or shares sitting in your Stock Plan Account you could consider investing these into a Stocks and Shares ISA. The ISA allowance for the current tax year is £20,000. HM Revenue and Customs (HMRC) doesn’t let you transfer shares from your Stock Plan Account straight into an ISA. If you hold shares, you would need to sell them via NetBenefits first. This may mean you make a gain and have to pay Capital Gains Tax (CGT). You can then use the cash to buy the shares again, or choose new investments, inside an ISA. Any future gains will then be tax-free, including CGT. Find out how to open an ISA and then transfer cash from NetBenefits. -
Save As You Earn (SAYE) or Sharesave shares
If you took 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 keep your shares. You can move these shares into a tax-efficient ISA, as long as it’s within 90 days after the end of your savings period. You won't pay Capital Gains Tax (CGT) on any gains you've made. The transfer will count towards your annual ISA allowance. Once the shares are in your ISA, any growth or income is tax-free and you won't pay any CGT if you sell any shares.
How much CGT could you pay?
First, check if Capital Gains Tax (CGT) applies to you.
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 Stock Plan Services (SPS) in the US you can find out the share price by calling the Fidelity SPS 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.
This leaves a £2,000 gain that you'll pay CGT on.
How much CGT you pay depends on your taxable income.
If you're a basic rate taxpayer, 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're a basic rate taxpayer. As a higher rate taxpayer you’d pay £480.
How do you want to invest with Fidelity International?
Ready to start investing with Fidelity International or top up an existing account? You can move money from your Stock Plan Account to invest with Fidelity International. You can also use cash that's already in your bank account, or transfer cash or investments from another investment provider.
Employer's stock plan
Bank account or another investment provider
FAQs
HM Revenue and Customs (HMRC) doesn’t let you transfer shares from a Stock Plan Account into an ISA as they are.
However, here’s what you can do:
Step 1
Sell your shares in your Stock Plan Account via NetBenefits. This sale may be subject to Capital Gains Tax (CGT) if your gain exceeds the annual CGT allowance (see details above).
To sell your shares, log in to NetBenefits and select ‘sell’ alongside the shares you want to sell.
Step 2
After the cash has been received from the sale, visit investing from your employer's stock plan to learn how to transfer your cash from NetBenefits to a Stocks and Share ISA with Fidelity International.
If you have an Investment Account or Stock Plan Investment Account with Fidelity International and you want to transfer your shares to a Stocks and Shares ISA with us, follow these steps:
Step 1
Sell your shares. HM Revenue and Customs (HMRC) don’t let you transfer shares into an ISA as they are. This sale may be subject to Capital Gains Tax (CGT) if your gain exceeds the annual CGT allowance (see details above). To sell your shares, log in to your Fidelity International account, go to 'Manage Investments' and choose 'Buy, sell, switch'. Please remember, your money will be out of the market for up to four working days.
Step 2
After the sale, the cash will be paid into your Fidelity International Investment Account.
Step 3
Move the cash to an ISA:
- If you've already got an ISA, move the money from your Investment Account to your Cash Management Account (which is automatically opened for you when you join Fidelity International) and then to your ISA. You can then 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, move the cash into a new ISA by using a Bed & ISA form. To upload the form log in, go to 'Documents & Messages' and then 'Upload forms and documents'. We'll confirm when your new ISA is open so you can choose where to invest this cash.
To transfer your shares to your spouse, you'll need to fill out a Stock Transfer Form. It can be used for:
- 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.
When you've completed the form log in to your account and go to 'Documents & Messages' in the main menu. Select 'Upload forms and documents'. Use the scan and upload tool to send the form. We'll let you know when we've completed your instruction.
For more information, see our Stock Transfers Guide: What you need.
Help and support
US stock plan assistance
Moving cash or shares to 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.
*Please note when visiting NetBenefits.com this will take you to a separate website. Review the new site's terms, conditions, and privacy policy, as they will be different.
