My five-year “save while you earn” (SAYE) stock purchase program with my employer expired on March 1, 2024.
The program administrator, Signal Shares, told me in mid-February that I could make a wire transfer to my nominee account at Hargreaves Lansdown.
From there it was stated that I could make tax-free transfers to my stocks and shares Isa, using my Isa allowance for tax years 2023/24 and 2024/25, under the rule 90 days for SAYE transfers.
I had done this before when the project administrator was Yorkshire Building Society, but administration was transferred to Signal two years ago.
However, I am now being told that the only way to receive my shares is through a paper certificate, and that it takes four to six weeks to receive it.
Time is up: our readers’ SAYE system has matured and they want to transfer the shares into an Isa – but risk missing the tax year deadline because they have to wait for a paper certificate.
This makes it impossible to include shares in my Isa this tax year.
Not being able to do this means I will have to pay CGT on a much larger proportion of the shares, especially as the CGT allowance will be halved from £6,000 to £3,000 over the next year tax. The sums of money involved amount to several tens of thousands.
Helen Kirrane from This is Money responds: Save as you Earn is a savings-linked stock plan in which a company’s employees agree to purchase shares with their savings at a fixed price.
They can save up to £500 a month under this scheme and, at the end of the term (usually three or five years), they can use the savings to buy shares.
Signal Shares is managed by Link Group. It is a platform that allows employees and shareholders to access their company’s stock savings plans, whether it is an investment in their own name or a shareholding of which they are members.
Some, but not all, shareave programs require shares to be issued directly to the shareholder’s home via a paper stock certificate upon maturity. Unfortunately, your sharing project with Cranswick is one of them.
Once you receive your certificate, you can transfer some or all of your shares into an Isa.
There is a 90 day time limit to do this, and the receiving Isa provider will normally require a ‘letter of appropriation’ from Signal Shares, which authenticates when the shares have come from the sharesave programme.
I asked two investment experts for advice on your situation.
Max Farar of Hargreaves Lansdown responds: I understand that this is an extremely frustrating scenario and one that I fear could cost you lost tax benefits.
More than 95 percent of stock trading takes place in the digital world, and it’s increasingly rare for the shares you save as you earn to be issued via a certificate, which has a big impact on the speed and effectiveness of treatment.
Special rules apply to SAYE schemes which mean you can transfer your shares into an Isa without having to worry about capital gains tax.
You have 90 days from the due date to do so. Therefore, the fact that CGT increases from £6,000 to £3,000 on April 6 will not make any difference if you manage to shelter your shares for the 90 day period.
So even though Signal Shares takes four to six weeks to issue and mail a paper stock certificate, you will still be within the 90 day time frame.
However, the problem arises if your shares are worth more than £20,000. Normally you can only transfer up to £20,000 into an Isa, but as your 90 day window spans two tax years, you can potentially transfer up to £40,000 worth of shares into your Isa, in using the allocation. for tax year 2023/24 and tax year 2024/25.
This is where it’s important that Signal provides you with your paper certificate before April 5, so you can use your Isa allowance for both tax years. If you miss the midnight deadline of April 5, it will be too late to use this year’s Isa allowance.
It seems unfair to penalize you and your colleagues in the SAYE system due to an administrative change during your mandate.
The process of transferring SAYE shares outside the 90 day period, from a certificate or general investment account to an Isa, will mean that the shares will need to be sold and repurchased in the Isa package.
The sale transaction will make you liable for CGT on any gain you make that exceeds the annual CGT allowance (£6,000 for 2023/24, halved to £3,000 in 204/25). If you are a basic rate taxpayer you will pay 10 per cent, if you are a higher or additional rate taxpayer it is 20 per cent.
A spokesperson for Link Group, which manages Signal Shares, responds: We make every effort to transmit the necessary documents to shareholders as quickly as possible.
The real problem with the process comes from the industry-wide need to use paper certificates, as required by existing rules under the Companies Act.
For years we have been at the forefront of digitizing the UK shareholder settlement system and removing paper certificates, which will significantly simplify and speed up the process for everyone involved.
Helen Kirrane from This is Money responds: Although the rules may change in the future, it seems that for now your only option is to hope that Signal Shares gets your certificate to you in time for the end of the tax year.
Our contact with them unfortunately did not bring any promises from Signal of a potentially faster resolution, so we wish you good luck.
As your shares are worth more than £20,000, this unfortunately means you could be liable to pay tax if you fail to complete the first transfer before the April 5 deadline.
Hopefully the archaic system of paper certificates is on its way out, and those like you who participate in employee share plans won’t have to deal with this frustration for much longer.
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