Get tax savvy

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.

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.

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.

Please note : Fidelity International and Fidelity Stock Plan Services, LLC are separate companies that operate in different jurisdictions through their subsidiaries and affiliates.