Taxation

Shareholder taxation

Various types of UK tax may apply to your shareholding in Ricardo plc as an individual.

For example:

• Income tax is liable on dividends paid by Ricardo
• Selling shares may incur a capital gains tax liability
• Selling shares on behalf of a deceased relative may result in an inheritance tax liability

Personal circumstances will vary; the following information should not be taken as advice.

If you have any queries on taxation, you should consult an independent financial adviser in the first instance.

Neither Ricardo nor Link Group are permitted to offer financial advice.

Capital gains tax

Current legislation means that when selling shares, a shareholder may be liable to Capital Gains Tax (CGT), depending on the amount of the gain and the shareholders circumstances at the time. The threshold for individuals for the 2021/22 tax year is £12,300 of gains, above which figure CGT is payable. You may wish to contact an independent financial adviser to ascertain your circumstances before making a sale.

Shareholders normally only have to pay CGT on shares when they have disposed of them. The gain is calculated by subtracting the value of the shares on the day they were acquired from the value on the day they were sold. If the total gains from the disposal of all assets (including shares) in one tax year exceeds the threshold, CGT liability will apply.

When disposing of shares that were received as a gift the gain is normally calculated using the market value of the shares on the day they were received

In the case of inherited shares, the estate of the person who died does not pay CGT at that time. If the shares are disposed of later, the gain is calculated by taking the market value at the time of the death.

Selling or giving shares to a spouse whilst legally married and living together does not give rise to a CGT charge. If the spouse later sells the shares, he or she will calculate the CGT at that time by taking what you paid for them.

For further information please refer to the HMRC website.

Inheritance tax

A charge to Inheritance tax (IHT) arises when someone dies or when assets are transferred to a discretionary trust or to a company. Tax will only be payable if the estate on death or the value of all the assets transferred (including shares) is more than the tax threshold. For 2022/23, the tax threshold is £325,000.

If there is any IHT to pay when someone dies, the tax must be paid before the probate registry will issue a grant of representation. You may need to apply for this grant of representation with the help of a solicitor or other agent.

ISAs and tax-free share investment

Shareholders who may wish to invest in an ISA should consult their independent financial adviser.  The overall ISA limit for the tax year 2022/23 is £20,000.