financial planning

How to sell shares

Do you want to sell some shares? Perhaps they are an inheritance and you would prefer the cash. Or maybe you have held the shares for many years and judge the time is now right to offload the stock.

Here’s how to go about it…

Select a stockbroker

Whatever the reason for the sale, you can only trade shares through a stockbroker. So, first you have to select your broker. There are various different types of stockbroker and the choice depends largely on your dealing habits and your budget.

Execution only

Some stockbrokers operate solely on an execution-only basis, which means they do not offer any advice. They are therefore best suited to the more sophisticated investor, who is happy to go it alone.  An execution-only service can also be a good option if you want to carry out just one simple trade, perhaps if you want to sell a batch of shares.

Help and guidance

If you are not a confident share trader, you might prefer a stockbroker that offers an advisory service.  You would then be given help and guidance about the sale of your shares, though the final decision would be yours.  Or, you could select a discretionary or management service, allowing the stockbroker to take all the decisions on your behalf.

Nominee accounts

You then have to decide between a nominee account and a certificated account. With a nominee account, the shares are held in the stockbroker’s name and the firm takes care of all the administration. You are still the ultimate owner (and any shareholder perks, such as discounts, should still be yours to enjoy), but nominee accounts are increasingly popular because they are simple and convenient.

Paper share certificates

If you opt for a certificated account, you will receive paper share certificates and the shares will be in your name. Bear in mind, though, that the process of selling – and buying – shares could take a lot longer as you will have to post the certificates to the broker.

Stockbroker commission

It’s important to check out any account fees so you understand the costs involved. Stockbrokers charge a fee or commission for every share trade. The commission is either a flat rate or a percentage and varies according to the firm and the type of service. An execution-only broker, for example, might charge commission of £2.95 if you are a regular trader, or £11.95 if you buy and sell shares only rarely. There are also different charges for postal, phone and online share deals.

If you are unsure about your tax position, you should speak to an accountant or tax adviser.

You can switch to a different broker if you are not happy with the service or costs, though you might have to pay a transfer fee.

Tax bill

There is no stamp duty payable on the sale of shares, but you could incur a tax bill if the profit from the sale exceeds your annual capital gains tax allowance, which currently stands at £10,900 (for 2013-14 tax year). If you are unsure about your tax position, you should speak to an accountant or tax adviser.

The rules are different if you are selling shares in your own business – again, it is important to take expert advice on tactics and timing.

Information for investors

It’s not always easy to decide if and when to sell shares, but there’s plenty of information available to help you reach a decision. Your stockbroker should be able to provide stock reports. There are also various magazines and websites aimed at the amateur investor.

Guides
How to sell shares
How to buy shares
Alternative Investments top level
Alternative Investments
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