Question
My husband has quite a few shares in one company and wishes to cash then in,what is the limit he can cash in to avoid paying capital gains tax and will he have to pay income tax on them.He took early retirement just over 2yrs ago and recieves a works pension which he pays income tax on.Answer
The annual capital gains tax allowance is currently £10,600 (2012/13 tax year), so your husband can realise gains up to this amount without having to pay any tax. Gains in excess of this will be added to his income with those gains falling into his basic rate band taxed at 18% and any gains falling into his higher rate band taxed at 28%.
However, there's scope to use your allowance too. Your husband can transfer shares across to you, without selling them, allowing you to realise gains too. The shares will be treated as if you'd bought them at the original price your husband paid. So it's very easy to split the gain and use both your allowances. Your husband just needs to ask his stockbroker for a stock transfer form.
If there's still a lot of taxable gain after using both your allowances your husband could hold back on selling some shares (if viable) until the next tax year, i.e. after 5 April 2013 - when you'll both have fresh capital gains tax allowances to use.
You can read more and use a CGT calculator on our capital gains tax page.
My husband has quite a few shares in one company and wishes to cash then in,what is the limit he can cash in to avoid paying capital gains tax and will he have to pay income tax on them.He took early retirement just over 2yrs ago and recieves a works pension which he pays income tax on.Answer
The annual capital gains tax allowance is currently £10,600 (2012/13 tax year), so your husband can realise gains up to this amount without having to pay any tax. Gains in excess of this will be added to his income with those gains falling into his basic rate band taxed at 18% and any gains falling into his higher rate band taxed at 28%.
However, there's scope to use your allowance too. Your husband can transfer shares across to you, without selling them, allowing you to realise gains too. The shares will be treated as if you'd bought them at the original price your husband paid. So it's very easy to split the gain and use both your allowances. Your husband just needs to ask his stockbroker for a stock transfer form.
If there's still a lot of taxable gain after using both your allowances your husband could hold back on selling some shares (if viable) until the next tax year, i.e. after 5 April 2013 - when you'll both have fresh capital gains tax allowances to use.
You can read more and use a CGT calculator on our capital gains tax page.
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