SIP 2016

[A2B]

Should be around 103 like last time it's another 1% of the company

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Cheers. I don't suppose we know at what price the shares were bought at as obviously this will have an affect on amount/value.

[RobertT]

Should be around 103 like last time it's another 1% of the company

https://www.gov.uk/government/uploads/s ... es-web.pdf" onclick="window.open(this.href);return false;

Cheers. I don't suppose we know at what price the shares were bought at as obviously this will have an affect on amount/value.

The last batch of 1% was actually 90 shares(full time) but there were another 13 given out because of ‘bad leaver’ shares being re-distributed. So in my opinion we should get roughly the same again, although my DOM said we’ll only get about 75.

The free shares will be allocated on 6th October so we obviously don’t know the price yet. The date the extra shares from the dividend will be bought hasn’t been disclosed.

[mark.cup]

They're only worth what we can sell them for after 3 or 5 years really but at today's price just over £500

[RobertT]

They're only worth what we can sell them for after 3 or 5 years really but at today's price just over £500

Although the price on allocation day, in relation to the price on the day you sell them, can affect how much tax and NI you pay if you sell before the 5 years are up.

[mark.cup]

They're only worth what we can sell them for after 3 or 5 years really but at today's price just over £500

Although the price on allocation day, in relation to the price on the day you sell them, can affect how much tax and NI you pay if you sell before the 5 years are up.

True I'm really trying to hold all mine till the 5 years are up plus the share save ones would be a nice tidy sum then

[A2B]

They're only worth what we can sell them for after 3 or 5 years really but at today's price just over £500

Yeah very true, hopefully they will at least keep their initial value anything extra will be a bonus

[theargyspy]

I find I work a lot harder, and I'm a lot more conscientious, now that I'm a Share Holder!

It does surprise me though...The amount of fellow shareholders who continue to deliver Un-Franked (FREE) Stamps, Redirect Customers Mail to new Addresses without a Redirection Request (FREE) and generally don't seem to be too bothered about increasing our Dividends!

I think you will find that we are supposed to Redirect Customers Mail to new addresses without a Redirection Request for free

[stan_lers]

Just wanna cash mine in and leave.

It will be interesting to see how many leave in October. I'm also of a mind to sell mine and go, but who knows, October might be an easy month and I might want to stay on a bit longer

If you're staying for the shares, it'd probably be better to wait a while longer. Tens of thousands of us selling our shares at once is probably going to bring the value down. Wait for them to stabilise and then boost from Christmas profits and you'll probably make more money out of them. That's what I'm planning on doing anyway.

[wandle]

Thinking of selling your free shares in October ? Here’s why I think you should consider hanging on to them a bit longer…

OK, so it’s obviously a bit tempting to sell. After all, it’s ‘free’ money isn’t it? We never had to buy these shares, they were given to us as part of the 2013 privatisation of Royal Mail. So, whatever price we sell at, it’s ‘all gravy’ (as they say in parts of London).

There are, however, some things I think each of should consider:

You cannot sell ALL your free shares in October. You can only sell the 613 shares allocated in October 2013. The 112 shares awarded in April 2014, and a subsequent allocation of 103 shares (bringing the total awarded to each full-time employee to 832 shares) cannot be sold until they have been held for 3 years from when they, in turn, were allocated.

Selling your 613 shares in October this year will mean you lose a significant portion of their value, because you will have Income Tax and National Insurance deducted. Why? Well, under the rules of Share Incentive Plan (SIP) schemes, you have to hold the shares awarded to you for FIVE years from the date they were allocated, for them to not attract Tax and NI deductions.

You must be wondering, how much will I lose, in Tax and National Insurance if I sell these 613 shares now? Well, the answer is not totally straightforward, because the SIP rules are such that it depends on the Royal Mail share price on the date that you sell.

If the share price is 489p or lower, you’ll pay Tax/NI based on the calculation 613 x the share price on the day you sell.
If the share price is 490p or greater, e.g. 520p (as it was at the time I was writing this article), you pay Tax/NI on 613 x 489p, irrespective of how far above this level the share price should happen to be

This is because the SIP Scheme rules dictate that you pay Tax/NI based on whichever is lower: the share price on the day you sell, or the share price at which the shares closed on the first day of trading (the ‘Initial Market Value’). As you may recall, the share price of Royal Mail shot up significantly from the 330p flotation price on the first day of trading, closing at 489p, causing a headache for the trustees of our SIP scheme. Under government rules, employees can only be awarded Free Shares to a maximum value of £3000 in any single financial year. The free shares to which full-time employees were entitled upon flotation of Royal Mail amounted to 729 shares each, but it was not possible to allocate the full entitlement without breaching the £3000 limit. So, 613 shares were awarded to full-time employees, which stayed within the SIP rules because 613 x 489p = £2997.57

So, selling your 613 free shares in October this year, means that - with the share price currently above this 489p threshold - you will be liable for Tax/NI on the ‘Initial Market Value’, not the (higher) share price on the day you sell. With the proceeds of sale being subject to 20% Income Tax and 11% National Insurance, that amounts to a loss to you (and a tax take for HM Government) of £929.25. That is a lot of ‘free’ money to squander. It is why I firmly believe, if your individual circumstances allow you to, it would be much better to wait until October 2018 before selling your shares. A further thing to consider is this: if you hang on until 2018, you will receive dividends on those 613 shares, in December 2016, July 2017, December 2017, and July 2018. There are no guarantees, but, most companies pursue a policy of growing their dividend payments year-on-year. Given that Royal Mail paid 22.1p per share (comprising payments of 7p and 15.1p per share) for the 2015/2016 Financial Year, it is not a stretch to anticipate that hanging onto your free shares for two more years would mean you receive at least 44.2p per share in dividend payments, amounting to almost £271, on this tranche of 613 shares.

So, it’s clear to me that, tempting as it may be to sell in 2016, the thought of missing out on a combined £1200 in Tax, National Insurance and those dividend payments (outlined above) would be extremely foolish. Think about it: the Coalition Government led by David Cameron and what-was-his-name again (?) was heavily criticised for selling-off Royal Mail too cheaply, when they priced them at 330p, only to see the price skyrocket on the first day of trading.

£1200, when divided by 613, equates to around £1.95 per share. So, if the Royal Mail share price is 520p in October 2016, and you sell, it could be argued that in effect you have parted with your shares for a gain of only 325p/share… less than the price those ‘fools’ in government sold the shares to the public for ! Here’s your chance to show that you’re smarter than the people who govern you !

[RobertT]

All good advice, although a couple of things need to be corrected:

We actually got 116 shares in April 2014
National Insurance is payable at a rate of 12%

[richystran]

Thinking of selling your free shares in October ? Here’s why I think you should consider hanging on to them a bit longer…

OK, so it’s obviously a bit tempting to sell. After all, it’s ‘free’ money isn’t it? We never had to buy these shares, they were given to us as part of the 2013 privatisation of Royal Mail. So, whatever price we sell at, it’s ‘all gravy’ (as they say in parts of London).

There are, however, some things I think each of should consider:

You cannot sell ALL your free shares in October. You can only sell the 613 shares allocated in October 2013. The 112 shares awarded in April 2014, and a subsequent allocation of 103 shares (bringing the total awarded to each full-time employee to 832 shares) cannot be sold until they have been held for 3 years from when they, in turn, were allocated.

Selling your 613 shares in October this year will mean you lose a significant portion of their value, because you will have Income Tax and National Insurance deducted. Why? Well, under the rules of Share Incentive Plan (SIP) schemes, you have to hold the shares awarded to you for FIVE years from the date they were allocated, for them to not attract Tax and NI deductions.

You must be wondering, how much will I lose, in Tax and National Insurance if I sell these 613 shares now? Well, the answer is not totally straightforward, because the SIP rules are such that it depends on the Royal Mail share price on the date that you sell.


If the share price is 489p or lower, you’ll pay Tax/NI based on the calculation 613 x the share price on the day you sell.
If the share price is 490p or greater, e.g. 520p (as it was at the time I was writing this article), you pay Tax/NI on 613 x 489p, irrespective of how far above this level the share price should happen to be

This is because the SIP Scheme rules dictate that you pay Tax/NI based on whichever is lower: the share price on the day you sell, or the share price at which the shares closed on the first day of trading (the ‘Initial Market Value’). As you may recall, the share price of Royal Mail shot up significantly from the 330p flotation price on the first day of trading, closing at 489p, causing a headache for the trustees of our SIP scheme. Under government rules, employees can only be awarded Free Shares to a maximum value of £3000 in any single financial year. The free shares to which full-time employees were entitled upon flotation of Royal Mail amounted to 729 shares each, but it was not possible to allocate the full entitlement without breaching the £3000 limit. So, 613 shares were awarded to full-time employees, which stayed within the SIP rules because 613 x 489p = £2997.57

So, selling your 613 free shares in October this year, means that - with the share price currently above this 489p threshold - you will be liable for Tax/NI on the ‘Initial Market Value’, not the (higher) share price on the day you sell. With the proceeds of sale being subject to 20% Income Tax and 11% National Insurance, that amounts to a loss to you (and a tax take for HM Government) of £929.25. That is a lot of ‘free’ money to squander. It is why I firmly believe, if your individual circumstances allow you to, it would be much better to wait until October 2018 before selling your shares. A further thing to consider is this: if you hang on until 2018, you will receive dividends on those 613 shares, in December 2016, July 2017, December 2017, and July 2018. There are no guarantees, but, most companies pursue a policy of growing their dividend payments year-on-year. Given that Royal Mail paid 22.1p per share (comprising payments of 7p and 15.1p per share) for the 2015/2016 Financial Year, it is not a stretch to anticipate that hanging onto your free shares for two more years would mean you receive at least 44.2p per share in dividend payments, amounting to almost £271, on this tranche of 613 shares.

So, it’s clear to me that, tempting as it may be to sell in 2016, the thought of missing out on a combined £1200 in Tax, National Insurance and those dividend payments (outlined above) would be extremely foolish. Think about it: the Coalition Government led by David Cameron and what-was-his-name again (?) was heavily criticised for selling-off Royal Mail too cheaply, when they priced them at 330p, only to see the price skyrocket on the first day of trading.

£1200, when divided by 613, equates to around £1.95 per share. So, if the Royal Mail share price is 520p in October 2016, and you sell, it could be argued that in effect you have parted with your shares for a gain of only 325p/share… less than the price those ‘fools’ in government sold the shares to the public for ! Here’s your chance to show that you’re smarter than the people who govern you !

Correct me if im wrong, but is it not the case that we pay tax an n.i on the LOWER OF the market value of when you were given them, or the value of them the day you sell them. Basically whichever was lower?

So we will NOT be paying tax on £5.20 but on the value they were on the day we where given them iirc £3.60

[RobertT]

Correct me if im wrong, but is it not the case that we pay tax an n.i on the LOWER OF the market value of when you were given them, or the value of them the day you sell them. Basically whichever was lower?

So we will NOT be paying tax on £5.20 but on the value they were on the day we where given them iirc £3.60

The market value when the first batch of 613(full time) shares were allocated was £4.89, therefore if the price is higher than that, tax and NI would be calculated using £4.89. If the market value at the date of sale is lower than £4.89, then that figure would be used instead.

The ‘allocation price’ of the second batch of 116 shares was £5.15, and the third lot of 103 was £4.58. The price when RM was first floated was £3.30, while the option price for SAYE is £3.60.

[Dorset Plodder]

I find I work a lot harder, and I'm a lot more conscientious, now that I'm a Share Holder!

It does surprise me though...The amount of fellow shareholders who continue to deliver Un-Franked (FREE) Stamps, Redirect Customers Mail to new Addresses without a Redirection Request (FREE) and generally don't seem to be too bothered about increasing our Dividends!

I think you will find that we are supposed to Redirect Customers Mail to new addresses without a Redirection Request for free

Well you live and learn! And all these years I've been sending anyone that's moving down to the Post Office to arrange, and PAY, for a Redirection! Perhaps I should start doing it for FREE now?

[theargyspy]

I find I work a lot harder, and I'm a lot more conscientious, now that I'm a Share Holder!

It does surprise me though...The amount of fellow shareholders who continue to deliver Un-Franked (FREE) Stamps, Redirect Customers Mail to new Addresses without a Redirection Request (FREE) and generally don't seem to be too bothered about increasing our Dividends!

I think you will find that we are supposed to Redirect Customers Mail to new addresses without a Redirection Request for free

Well you live and learn! And all these years I've been sending anyone that's moving down to the Post Office to arrange, and PAY, for a Redirection! Perhaps I should start doing it for FREE now?

See below, if someone has moved and the new occupier puts the old occupiers new address on the letter and puts it in a postbox then you are supposed to deliver it for free
of course if someone moves & they want to have their mail re-directed they have to pay but in your post you said " Redirect Customers Mail to new Addresses without a Redirection Request" which is what we are supposed to do if new occupier puts old occupiers address on a letter and re-posts it (for free)


6. FORWARDING A LETTER

6.1 A recipient of a Letter (except a Business Reply, Freepost, Special Delivery or Recorded Letter) may forward it from its original address to another address in the United Kingdom, the Channel Islands or the Isle of Man by writing or printing the new address on the Cover or envelope of the Letter and re-posting the Letter. A Letter may only be forwarded in this way to the original Addressee.

6.2 Except in the circumstances set out in section 6.3 below, Royal Mail will not charge additional postage or fees for forwarding a Letter that has been re-posted in accordance with section 6.1 above.

6.3 Royal Mail will charge additional postage and any applicable fee for forwarding a Letter if it has been opened before being re-posted, or the name of the original Addressee is covered or obscured, or it is forwarded by a Business or a person acting on behalf of a Business. Royal Mail may charge an additional fee to be fixed by Royal Mail from time to time, to forward a Letter.

6.4 Royal Mail may at its discretion deliver to the Addressee or return to the Sender a Letter which has been forwarded and which bears a Special Delivery or Recorded label. In either case Royal Mail will charge the Addressee or Sender additional postage and/or a fee to be fixed by Royal Mail from time to time.

6.5 In any case where Royal Mail considers that a Letter has been forwarded to evade payment of postage it may treat it as an unpaid Letter in accordance with section 17 of this Scheme.

6.6 Royal Mail can be required under the Social Security Administration Act 1992 and the Social Security Administration (Northern Ireland) Act 1992 (“the Acts”) not to deliver items of Social Security Post which have been forwarded or redirected to a new address, but to return them to the Sender. Royal Mail is required under the Acts to provide information about the redirection of Social Security Post to persons specified in the Acts.

[Dorset Plodder]

See what you're getting at there Argy. Agree that you'll often get someone just writing the "New" address on the front of someones envelope. Of course I'll deliver them, and I'll then put one of those "The Home Office suggest you use Royal Mail Redirection Service to avoid Fraud....." stickers on.

Once I've explained what that means they often say, "Never gave Fraud any thought.... think I'd better set up a Redirection"! The obvious exeption would be if it's your Mum & Dad redirecting your mail....I think you could probably trust them?

IMO we need to be making money, if we want to getting pay rises and bonuses, I may be labouring the point but I'm sure we all know Posties who run around the office slipping mail into other peoples frames, for customers who have moved from their walk. Just because they can't be bothered to deliver it as addressed?