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EQ SAYE, CGT And Eqi Flexible ISA

SAYE, CGT And EQi’s Flexible ISA

Wednesday, 29 November 2023

The government reduced the Capital Gains Tax (CGT) Annual Exempt Amount from £12,300 to £6,000 from 6 April 2023 and announced it will reduce further to £3,000 from 6 April 2024. This means more employees will need to think about CGT when making decisions about holding and selling shares received through their employee share plans. With many employees benefitting from a tax advantaged SAYE (Save As You Earn, Sharesave), this needs further consideration.

In November’s Autumn Statement, the Chancellor of the Exchequer announced that the government is making changes to simplify ISAs and provide more choice, meaning it will be easier for people to choose the best ISA accounts for their needs and move money between them.

Where a SAYE scheme is going to make a healthy profit, what choices do employees have to maximise their investment?

SAYE and CGT – Buying shares under an SAYE option (‘exercising the option’), and then selling those shares is a chargeable event for CGT purposes. HMRC statistics show average SAYE gains are over £3,000, so employees need to have information about CGT and their choices so that they don’t pay tax unnecessarily.

 There are several ways of reducing CGT liabilities including:

  • Using the CGT Annual Exempt Amount and considering selling shares over consecutive tax years.
  • Transferring shares to a spouse or civil partner so they can use their CGT Annual Exempt Amount.
  • Immediate transfer to a registered pension scheme (with the benefit of additional tax relief).
  • Transferring shares to an ISA from a SAYE plan where shares can be held or sold without CGT being applicable. The ISA allowance for 2023/24 is £20,000. Special rules apply to SAYE plans that mean that the transfer doesn’t count towards CGT, if shares are transferred within 90 days of exercising the option. Shares are valued using their market value at transfer and this counts towards the annual ISA allowance. Where the 90-day period straddles the end of a tax year, two years’ ISA allowance would be available.
  • Transferring shares to a ‘flexible ISA’ from a SAYE plan has similar features with additional freedom to take out cash and replace it in the same tax year without affecting the current year’s allowance. In practice this means participants can put shares into a flexible ISA, sell them, remove the cash, and then replace them with any remaining SAYE shares. This process can happen numerous times within the permitted 90-day period.
    • Example: You exercise your SAYE option and pay £10,000 for the shares. On the day that you buy those shares the market value is £25,000, a gain of £15,000.
    • Your flexible ISA allowance is £20,000 and you put £20,000 of shares into a flexible ISA.
    • You then sell some shares and withdraw £5,000.
    • You can then transfer the remaining shares with a value of £5,000 into the flexible ISA within the same tax year with no CGT liability if it’s within the permitted 90-day period.

What are we seeing?

Where there are gains on SAYE schemes that we administer, EQ can provide participants with various choices at maturity. These choices include: keeping shares, selling shares, transferring shares to their spouse/civil partner, or transferring their shares into an EQi ISA. We usually see about 3% - 5% of participants transferring shares into an ISA directly following their exercise of option. More recently, with some schemes seeing larger gains at maturity, plus the reduction in the CGT Annual Exempt Amount, transfers directly into an ISA have soared and in some cases are above 50%.

How can EQi’s flexible ISA work for your employees?

We are one of the few providers to offer a flexible ISA. It means that with an EQi ISA, employees have the freedom to withdraw money, and pay it back in the same tax year, without it counting against the annual £20,000 ISA allowance. Once employees have transferred shares to the ISA, they have a choice of keeping them, selling them to receive cash (and replacing with further shares if needed), or selling them and using the cash to diversify by investing in companies from around the globe and in funds which offer a basket of ready-made investments. 

Some FAQs

toggle What is Capital Gains Tax?

CGT is a tax on the profit when you sell an asset that has increased in value, for example shares, jewellery or paintings worth £6,000 or more (£3,000 or more from 6 April 2024). There are several exclusions, but it’s useful to know what is most likely to affect an investor.

The tax applies to the profit you make, not the amount of money you receive. There is a CGT Annual Exempt Amount of £6,000 (changing to £3,000 from 6 April 2024) and once your profits are higher than this figure in any tax year, you’re then liable to pay CGT. Any money invested in an ISA is not subject to CGT, regardless of personal income.

toggle What are the tax benefits of an ISA?

There are different rules that apply to savings, and level of income will impact the amount of tax paid on any income and profits earned.

UK rates of tax

Basic rate tax payer

Higher rate tax payer

Additional rate tax payer

ISA investor

Personal savings allowance and interest on fixed interest investments, including corporate bonds

20% over £1,000 of interest earned

40% over £500 of interest earned

45% on all interest earned


Capital gains once you exceed the £6,000 annual allowance





Dividend income over £1,000 on shares





toggle Why use EQi?

EQi offers customers independence, choice, and access to a wide range of investments. They are an established part of Equiniti and are FCA regulated. EQi are specialists and along with the new Lifetime ISA and Self-Invested Personal Pension, are one of only a handful of providers to offer a flexible ISA.

toggle How EQ can help?

Please contact your relationship team if you would like further information.

As part of SAYE maturity planning, your Share Plan Manager will be able to discuss the processes we use to ensure participants can easily exercise their SAYE option as well as provide their instructions to keep, sell, gift or transfer shares to an ISA. They will also share information about EQi’s flexible ISA product.