Knowing how to sell shares is an important step in the investing process. There may be cases where you hold onto stocks until you retire, or generously pass them down for someone to inherit. But if you’re trading stocks and shares over a lifetime, chances are you’ll plan on selling shares at some stage.
Before you get trigger-happy and start smashing that sell button, there are a few things to consider. Ideally, make sure you’ve got a decent grasp of the costs, what it means for your taxes, and importantly – whether you should be selling your shares in the first place.
Make sure you have a clear understanding of why you want to sell your shares. Next, assess what it will cost and how this sale fits into your wider investing goals. Another key area to think about is whether the sale of your shares will affect your tax position.
You might be thinking about selling your shares for several reasons. Here are some examples of common situations explaining why investors sell stocks:
It can definitely make a difference. Each investing platform will structure its fees in a variety of ways.
With some platforms, a commission fee will be charged when you buy or sell an investment. This makes selling your shares more expensive with certain brokerages.
What often matters is where you’re buying the shares in the first place, because that will likely be the place you’ll eventually sell them – although it is possible to transfer your shares over to a new provider.
It’s worthwhile to do plenty of research to make sure you’re set up with an affordable brokerage account before you start investing.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
For most retail investors (which is the likes of you and me), this isn’t possible. You’ll need to use some sort of brokerage service or share trading platform to carry out your sale. An exception would be if you owned private equity shares and sold them directly to another investor. With this, the private company often has to approve the sale.
This depends on the investment platform you’re using.
A handful of platforms won’t charge you anything to sell shares. Most brokerages will charge some sort of commission when you make a trade. This could be a flat fee, no matter how many shares you sell. Or, it might be a percentage of the value of the trade.
This is why it’s important to think about things carefully first. If you want to go ahead with a sale and your broker charges a commission, it could be worth making your sale in one go to keep costs down, whereas if there are low or no commissions, you might decide to sell your shares in chunks at different times.
Possibly. The answer to this depends on the type of investment account you’re using to hold your shares and whether the price has gone up or down.
If you’re using a general investment account (GIA), you may have to pay tax on the sale. Each tax year, you get certain allowances to use up. Currently, in the 2023/2024 tax year, you have a capital gains tax (CGT) allowance of £6,000 and a dividend tax allowance of £1,000.
This means you only have to pay tax on gains made that breach these thresholds within the tax year. The tax won’t apply automatically – you’ll need to report it.
If you’re selling because the shares have dropped in value, you won’t have to pay tax because you haven’t made a capital gain.
If your shares are in an individual savings account (ISA), then you won’t be taxed on any profits you make, so long as you stuck to the annual allowance in the year you bought them, which is £20,000 and was £20,000 in every tax year from 2017/18. Additionally, when you want to withdraw funds after selling your shares, you won’t be subject to income tax if the money is coming from an ISA.
Similarly, if you have a SIPP (self-invested personal pension), you’re also able to sell shares held within the account without paying tax on gains. But, when you start withdrawing money from a SIPP, it may be subject to income tax.
Other scenarios where no tax is due when you sell your shares or bonds include:
This depends entirely on the investments you own and what your goals are.
If you bought the shares as a long-term investment, you may only want to sell them once you’re ready to start using the funds in your portfolio.
There are other instances when you might want to sell shares earlier. This could be due to a shift in your personal circumstances or if something about the underlying stock changes.
The bottom line is that there is no single perfect time to sell your shares – it will depend on what makes the most sense for you.
There’s no perfect time to sell your shares. It’s all about how it fits in with the rest of your portfolio and investing goals. Setting yourself up with a cheap brokerage account can reduce costs and ensure you don’t pay more than you need to when the time comes to exit your position.
Before selling stocks or shares, ask yourself if you’re acting in line with your long-term financial goals. It’s best to avoid panic-selling. Equally, it is not a good idea to hold onto a floundering stock simply because you don’t want to sell at a loss. Try to keep emotions out of the equation and focus on what matters: your expectations for the company and your personal financial goals.
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