I want to put my company ‘save as you earn’ shares in an Isa – but it is insisting on paper certificates

My five-year ‘save as you earn’ (SAYE) share buying scheme with my employer matured on 1 March 2024. 

The scheme administrator, Signal Shares, told me in mid-February that I could make an electronic transfer to my nominee account with Hargreaves Lansdown. 

From there it said I could make tax-free transfers into my stocks and shares Isa, using my Isa allowance for the tax years 2023/24 and 2024/25, inside the 90 day rule for SAYE transfers.

I did this previously when the scheme administrator was Yorkshire Building Society, but administration was transferred to Signal two years ago. 

However, I am now being told that the only way I can receive my shares is through a paper certificate, and the lead time is four to six weeks before I receive it.

Time’s up: Our reader’s SAYE scheme 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 get the shares into my Isa this tax year. 

Being unable to do this will mean I will have to pay CGT on a much larger proportion of the shares, especially as the CGT allowance is being halved from £6,000 to £3,000 in the next tax year. The sums of money involved are several tens of thousands.

Helen Kirrane of This is Money replies: Save as you earn is a savings-related share scheme, where a company’s employees agree to buy shares with their savings for a fixed price.

They can save up to £500 a month under the 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 which allows employees and shareholders to access their company sharesave schemes, whether that is an investment in their own name, or a share plan which they are a member of.

Some, but not all, sharesave schemes require that the shares are issued directly to the shareholder’s home address via a paper share certificate when they mature. Unfortunately, your share scheme with Cranswick is one of these. 

Once you receive your certificate, you will be able to transfer some or all of your shares into an Isa. 

There is a 90-day window to complete 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 scheme.

I asked two investing experts for their advice on your situation.  

Max Farar of Hargreaves Lansdown replies: I appreciate that this is a hugely frustrating scenario, and one I’m afraid that could cost you in lost tax benefits.

Over 95 per cent of share trading is in the digital world, and it’s increasingly rare for save as you earn shares to be issued via certificate, which has a big impact on the speed and efficiency of processing.

Special rules apply to SAYE schemes that mean you can move your shares into an Isa without having to worry about capital gains tax. 

You have 90 days from the date of maturity to do this. Therefore the fact that CGT is decreasing from £6,000 to £3,000 on 6 April will make no difference if you’re able to shelter your shares within the 90-day period.

So even if Signal Shares takes four to six weeks to issue and send a paper share certificate, you’ll still be within the 90 day period.

However, the problem arises if your shares are worth more than £20,000. Normally you’d only be able to transfer up to £20,000 into an Isa, but since your 90-day window straddles two tax years, you’re potentially able to transfer up to £40,000 worth of shares into your Isa, using the allowance for tax year 2023/24 and tax year 2024/25.

This is where it’s important that Signal gets you your paper certificate ahead of 5 April, so you can use your Isa allowance for both tax years. If you miss the deadline at midnight on 5 April, you’ll be too late to use this year’s Isa allowance.

It seems unfair to penalise you and your colleagues in the SAYE scheme due to an administrative change mid-way through the term.

The process of transferring SAYE shares outside of the 90-day period, from a certificate or general investment account into an Isa, will mean the stock has to be sold and repurchased in the Isa wrapper.

The sale transaction will result in you being liable for CGT on any gain you make that exceeds the annual CGT allowance (£6,000 for 2023/24, halving to £3,000 in 204/25). If you’re a basic rate taxpayer, you’ll pay 10 per cent, if you’re a higher or additional rate taxpayer it’s 20 per cent.

A spokesperson from Link Group, which manges Signal Shares replies: We do everything we can to get the necessary documents to shareholders as quickly as possible.

The real issue with the process stems from the industry-wide need to use paper certificates, as set out in the existing rules under the Companies Act.

For years now, we’ve been at the forefront to digitise the UK’s shareholder settlement system and remove paper certificates, which will significantly simplify and speed up the process for all involved.

Helen Kirrane of This is Money replies: Though the rules could change in 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 didn’t bring any promise from Signal of a potentially quicker resolution, so we wish you the best of luck with this. 

As your shares are worth more than £20,000, it unfortunately means that you could be liable for tax if you can’t complete the first transfer before that 5 April deadline. 

Hopefully the archaic paper certificates system is on its way out, and those like yourself in employee share schemes won’t have to deal with this frustration for much longer. 

This post first appeared on Dailymail.co.uk