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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I received a share dividend from my employer of £29,000

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I received a share dividend from my employer of £29,000 last October and I now need to pay tax on this amount for 2015/16 tax year.
I have never paid CGT before so I am unsure how much I need to pay. I am married and wonder how I can best reduce the amount I need to pay on this, can I use both my own and my wife’s CGT allowance?

Do yu own the same number of shares in your employer company as you did before the dividend was paid?
Customer: replied 2 years ago.

Hi Tony,

Last year I have 60 shares in the company (50% were paid out and 50% reinvested) I have now also received a further 60 shares, however I have only just singed the paper work and they will be added to my allocation in June.



I'm a little unsure what the cash you received represents. You referred to it as a dividend and if it is a dividend, you may have income tax to pay on it, not CGT. Dividends are not subject to Capital Gains Tax. CGT is only payable when shares are sold? Were you given a dividend voucher when the dividend was paid? Can you tell me a little about how you came to acquire shares initially and what the paperwork you have signed recently says. Do you have any paperwork on the £29,000 payment?
Customer: replied 2 years ago.

Hi Tony,

Apologies I may have been unclear. I am part of an equity ownership scheme with my current employer. And as such receive equity/shares in the business.

The 29k last year was in relation to 50% of my equity being sold and the other 50% being reinvested in the company. I was under the impression (as advised from our FD) that the monies recieved last year are subject to CGT, I believe this would be around 5k, however I am keen to see if I can reduce this were possible?


In order for 50% of your equity to be reinvested, it must have been paid out.

The gain on the shares you sold will be based on what you paid for them and how the equity ownership scheme works. If your company has accountants and tax advisers, they will be far better placed than me to work out any gain which may be subject to CGT as the history of acquisitions and disposals will affect the calculation of any gain.

There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year that the gain is made. The first £11,000 of gains an individual made in the 2014/15 tax year is exempt from CGT. To determine the rate of CGT you will pay for 2014/15, you need to work out which of the following scenarios fits your circumstances:

1 If the sum of your income and the net taxable gain is £41,865 or less in 2014/15, then all the taxable gain will be charged to CGT at 18%.

2 If your income alone is £41,865 or more in 2014/15, then all the taxable gain will be charged to CGT at 28%.

3 If your income alone is less than £41,865 in 2014/15 but greater than £41,865 when the net taxable gain is added, then part of the net taxable gain will be charged to CGT at 18% and part at 28%.

As you are a shareholder in your employing company you may be entitled to entrepreneurs' relief which you can read about here. If you are, then the CGT rate will be 10%.

Take a look here for some information on employee share ownership schemes. One or none of those may be what your share scheme is based on.

I'm afraid that once the tax year has ended, there is nothing you can do to reduce your tax liabilities for that year.

I hope this helps but let me know if you have any further questions.

Customer: replied 2 years ago.
Thanks for this,
I do earn over the 41k mark, on hmrc they mention being able to combine you and your wife's ctg allowance, does this mean I can pay 28% on the 7k and not the full 29k?
I'm afraid that you cannot use your wife's CGT exemption against gains made in your name. The only way you could use her exemption is if you transferred shares to her before they were sold and that may impinge on any tax reliefs you may be entitled to.
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