UK - How to save taxes on stocks
Hi Blinders, I got 240k worth of stocks from Shopify this April when joining. Next year April, I will get 1/3rd of it vested and am planning to sell them to buy an apartment in London. I need advice since this is the first time I am in control of stocks and I have no idea whats the best strategy. I need advice on following fronts, 1. Should I sell stocks directly to invest in housing or wait for more growth (I believe shopify is growing even though there stocks are overvalued, correct me if I am wrong) 2. I am i UK for less than a year now, I don't know how taxing on stocks works(I am not clear on how it will be taxed from https://www.gov.uk/tax-employee-share-schemes/employee-shareholder-shares). 3. Will there be tax on sold value or from the profit? 4. Is there a fixed percentage for stock taxes? Feel free to give me advice beyond above 4 questions. Thank you. TC: 110k pounds + 240k usd/3 years YOE: 11, 0 years in FAANG #shopify #london #housing #stocks #advise #tax #savings #engineering #software
GOV.UKThe stocks will be taxed as income, some even at 60% (100-125) , then possibly capital gains if you hold at 20% after 12k. Not ideal. If you want property probably should cash out depending on your risk, or at least diversify to an etf tracker.
60% on gains or overall sell value? what is 100-125 means here? Thank you. I am noob on this.
Google 100k tax trap. As to your original question I'd love to know how to avoid tax on RSU or even options but seems when they vest treated as income in UK. There are approved tax efficient schemes but they tend to be for smaller sums so not used by the tech firms as far as I know
Short answer for UK taxes and RSUs, 1. RSU and their dividends are part of your income, and any gain of them will be taxed if gain > 12k. 2. Increase your pension contribution reduce your taxes 3. Sell RSU and invest in Stock and Share ISA to get zero taxes on your gains and dividends. 4. If you have spouse who does not have RSU or has smaller TC then open for them another ISA or gift them RSU if you don’t want to sell right away. 5. Keep spreadsheet for RSU, pensions, bonus, salary, etc for taxes self assessment. ==== Long answer (based on my experience and understanding so don’t take it as 💯 FINANCIAL ADVICE) 👇👇 - RSUs and dividends get taxed as income when they get vested usually between 45% to 55% and their gain are taxed as well if you gained more than the allowed limit. For example if your salary is 60k, bonus 5k and vested RSU are 30k then you have 2 options 1. Sell stock on same day of vesting or your gain is < 12.5k then your TC will be 95k and will be taxed for this. Your taxes most likely to be 45%. 2. Didn’t sell the stock the same day and let them appreciate more, then HMRC will tax you for 95k on rate 45% and when you sell if your gain is > 12.5k then you will pay extra capital gain taxes on these gains usually 20%. And you will need to fill self assessment tax forum. - The complications start when the total income get > 100k. This when you get into 60% tax trap as you will be a high earning individual and will need to submit self assessment at end of each year. You can get out of this 60% taxes by increasing your pension contribution to bring your income blew the 100k. Just keep in mind that pension has annual contribution limit of 40k a year and life limit of £1,073,100 any money beyond this in your pension account will be taxed on a high rate so you need to keep track of this. - For self assessment you will need to keep track of all RSUs vesting date, price at vesting and selling if you did sell, dividends, bonus, pensions contributions and any other taxed investment or accounts you have. - In UK you pay taxes on most of investment however there’re few ways to save with zero taxes. If you want to invest in stocks with zero taxes going forward; you need to sell the RSUs and invest them in Stock and Shares ISA account where you can invest up to 20k per year with no taxes on the investment, dividends or gains. If you have a spouse then you can open for them ISA account as well and gift them 20k this will get you 40k annually with zero taxes. You can do something similar for kids but with 9k limit per kid and the ownership of the account will transfer to the kids when they grow up and your aren’t free to use this account. - You can hire advisor for first year to help you get your head around all these rules and how to be tax efficient. Regards investing in properties 🏡 - It depends if you need the property right now or not, do you have at least 15% of property value to be eligible for mortgage, what risks and rewards you want to take with your investment (property usual has low risk but low reward as it takes longer to get decent gain out of it and you need to maintain it), what is your investment portfolio, etc. - You can get property and mortgage no matter how long you have been in UK as tech salaries considered one of top 10% in UK and if you work for well known company this gives more security for the bank that you will be in UK long enough to pay the mortgage without any problems. - Each lender have different measurements to ensure that you will pay your mortgage, some of these will be depend on how long you have left in your tier2 visa, is your company welling to renew your visa, how much will you burrow, it helps more if you have already big deposit at least 25% of the property but some banks will be fine with 15% deposit+ high salary and letter from your company that they will keep you for the next 5 yrs. The rule usually is the more deposit you have the more likely you will get mortgage. So if you don’t have good deposit I would say wait for another year or 2. - some banks offers free chats with mortgage advisors, you can chat with one of them to get more info, I would personally recommend HSBC for this type of chats specially if you are an existing client (you don’t need to have mortgage with them). - one extra tip If you’re planning to get property; you can open life time ISA which is another tax-free way to save cash needed in the short term; mostly for 1st time property buyers. You can save up to 4K a year and get a 25% top-up from the government so it’s a free 1k a year. Keep in mind that you can open only one ISA account every year and the 20k is limit on all your ISA accounts (whether it’s stock and share isa or life isa.
Hi OP, is this TC for senior or Staff level at Shopify ?
Man socialism blows. No offense to your TC. Try to come to America if you can.
If I am not wrong its difficult if you don't have a master degree in US to back you up or unbelievably great skills to be hired directly. I have neither of them.
Not really - I think the work visa would need some relevant degree (a bachelors) and get an offer here. Probably even easier to take transfer to any US office.