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Selling Shares - Slightly Complicated Situation

  • 05-03-2012 8:42am
    #1
    Player_86
    Registered Users, Registered Users 2 Posts: 123 ✭✭


    Hi all,

    My Dad worked for a large multinational corporation for many years before retiring in 2003. Every year, rather than take a financial bonus (which would have been heavily taxed), he chose to take shares in the business in lieu of the bonus for tax reasons (e.g. I think he had a choice between receiving €1,000 cash which would have been taxed, or €1,000 worth of shares tax-free). The shares are quoted on the FTSE, if that is relevant.

    Now, he and my Mam are making some improvements to the house, and he is considering selling a large chunk of the shares to fund this.

    My questions are as follows:

    1. Will he be liable for Capital Gains Tax of 30% (I believe it went from 25% to 30% in the last budget, or was that for CAT)?

    2. Are the shares subject to indexation? For example, he received some of these shares in the 1970s when they were worth next to nothing. Now, they are worth approx GBP£13. So, the Capital Gain would be huge when he sells. Or is it the case that the price of the shares in the 1970s will be index-linked to a price as if he acquired them more recently?

    3. In the last couple of years, he has received dividends of a reasonable amount - about £1,200 per annum. He hasn't declared it for income tax purposes. He genuinely is not the kind of person to try to evade tax; he just does not have a clue about these things. Will he be liable to pay interest and penalties, or are the amounts too small?

    4. Are there any ways to reduce his potential CGT bill? Could he gift shares to someone, or sell them in the UK, or anything like that? Naturally, compliance with the law is his main concern.

    5. How does one even go about calculating a tax bill like this? Can you do it yourself on the Revenue website, or should a professional be consulted?

    6. Are these questions too complicated and should I advise him to see a tax consultant?!

    Many, many thanks for taking the time to read this and (hopefully) offer some suggestions for my Dad. If you need any further info, just let me know.


Comments

  • #2
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    Player_86 wrote: »
    Hi all,

    6. Are these questions too complicated and should I advise him to see a tax consultant?!

    Yes and yes.


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