I get a number of shares in the company for which I work every year, so I have a number of shares that had various values when I acquired them.

When I sell a portion of my shares, I have various options over which shares to sell first.

I can only think of one scenario that would make me care about the order, and hence it seems to me that there are only two orders in which it makes sense to sell shares:

  1. You're selling a large amount of shares and might incur capital gains tax, so you want to sell the shares that had the highest value when acquired first to minimise or avoid tax.
  2. You're not selling that many shares, so you want to sell the shares that had the lowest value first, so you have the greatest opportunity to minimising tax in the future should you want to sell many shares.

Is there anything else that I've not considered that would affect the order in which to sell the shares?

  • 1
    Unless the gain from selling your shares is more than the annual allowance (£11,000 from April 2015), it makes no difference. – Steve Melnikoff Mar 17 '15 at 9:32
  • 4
    @Knuckle-Dragger I completely disagree. The price you acquired the share at is utterly irrelevant to its future performance (remember, these are all shares in the same company being discussed here). – Vicky Mar 17 '15 at 11:31

There are specific rules about how the gain is calculated when selling shares acquired at different times / prices in the same company.

See the HMRC article Tax when you sell shares: - in summary, you have to calculate the AVERAGE cost of acquisition and use that, so it makes no difference what order you sell them in.

In addition, there are particular rules about shares acquired through various types of Employee Share Scheme. There is loads of information about all this on the HMRC website but if you are at all unsure, I think you would be better off consulting a tax accountant.

  • embedded the link for you. good response, and good to understand difference from how we do it in the US. – JTP - Apologise to Monica Mar 17 '15 at 12:30
  • If I sell all of the shares that I acquired at one price, is that price still used to calculate the average? – SpoonMeiser Mar 19 '15 at 8:54
  • @SpoonMeiser good question. I think the answer is probably in here: gov.uk/government/uploads/system/uploads/attachment_data/file/… but it depends on so many variables (exactly when you bought the shares etc.) that a generic answer is impossible. – Vicky Mar 19 '15 at 13:28

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