How to Sell Shares You Bought Through an Employee Scheme

Employee share schemes are an attractive way to build wealth while contributing to the success of your workplace. Whether you received shares at a discount, earned them through performance, or purchased them as part of a salary-sacrifice program, they can become a valuable asset over time. But when the time comes to convert those shares into cash, many employees discover that selling shares acquired through these schemes is not always as simple as it sounds.

This guide walks you through what you need to know, from eligibility and tax considerations to timing and practical steps, so you can make confident and informed decisions.

Before taking any action, the first step is to understand the specific rules of your employee share plan. Every company operates its scheme differently, and these rules determine when and how you can sell. Many plans include a vesting period, which means your shares may be restricted from being sold for a set amount of time. Other schemes enforce a holding lock after vesting, especially in publicly listed companies.

It is also important to check whether you have been issued actual shares or options. Options usually need to be exercised before you can sell the underlying shares, and exercising them may involve additional costs or tax consequences. Reading your plan documentation or speaking with your HR or finance team will help you avoid any surprises.

Once you understand the scheme structure, the next step is to confirm that your shares are eligible for sale. Some shares vest gradually over several years, while others vest all at once. In some cases, the shares may have vested but are still subject to a trading window, especially for employees of listed companies who are considered insiders.

Most companies operate blackout periods during sensitive times such as quarterly reporting or major corporate announcements. Attempting to sell during a blackout period may breach internal trading policies or legal requirements. Always check the internal trading guidelines to ensure you are within an approved trading window.

If your employer is publicly listed, the practical process of selling shares is usually straightforward. Most employee share schemes are hosted on a third-party platform such as Computershare, Link Market Services, or EquatePlus. You can generally log in, view your shareholding, and select the option to sell. The platform will process the order using a partnered broker and deposit the funds into your nominated bank account.

Alternatively, some schemes allow you to transfer your shares to a personal CHESS-sponsored brokerage account. This is often preferred by experienced investors who want more control over timing and brokerage costs. To transfer your shares, you may need to submit a transfer request form and provide your Holder Identification Number (HIN).

If your company is not listed, selling shares becomes more complex. Private companies often restrict selling shares to internal buyback programs, approved third parties, or liquidity events such as company sales or IPOs. If you work for a start-up, it’s common to hold shares for long periods until a liquidity opportunity arises.

One of the biggest considerations when selling shares from an employee scheme is tax. Employee share schemes are subject to specific tax rules, and the timing of when you were taxed, either upfront or at vesting, affects how much tax you may owe when selling.

If you were taxed at the time the shares vested, any increase in value from that point until the date you sell may be subject to capital gains tax. If you held the shares for more than 12 months after vesting, you may be eligible for the capital gains tax discount. Conversely, selling within 12 months typically results in higher tax.

Additionally, if you received a discount on your shares as part of the scheme, that discount may have been considered taxable income. Keeping records of the original cost base, vesting date, and any tax already paid is crucial to correctly calculate your tax outcome.

Because tax outcomes vary depending on your salary, residency status, and scheme type, speaking with a tax adviser can help you avoid unexpected liabilities.

While the mechanics of selling shares are important, deciding when to sell is just as critical. Many employees choose to sell immediately after the shares vest, especially if they want to avoid exposure to market fluctuations or if the shares represent a large portion of their wealth.

Others take a longer-term approach, holding the shares to take advantage of potential price growth or capital gains tax benefits. The “right” timing depends on your financial goals, risk tolerance, and confidence in the company’s long-term performance.

It’s also smart to consider diversification. If a large percentage of your wealth is tied to your employer, selling shares can help reduce financial risk. Relying on both your income and investments from the same company can be risky if the company experiences downturns.

When you proceed with selling shares, you’ll typically need access to certain documentation. These may include your employee ID, tax file number, share plan account details, and bank information. If your company uses a share plan platform, make sure your login details are up to date. If transferring shares to a personal broker, check whether you need certified identification.

Maintaining organised records also helps with tax reporting. Keeping track of purchase prices, vesting schedules, sale prices, and brokerage fees will make your end-of-year tax return much simpler.

Selling shares acquired through an employee scheme can be a straightforward process with the right preparation, but it does require attention to timing, tax rules, and your company’s trading policies. By understanding how your scheme works, reviewing any vesting or trading restrictions, and planning around tax considerations, you can make informed decisions that support your financial goals.

Whether you choose to sell immediately or hold for the long term, taking a strategic and well-researched approach ensures you get the most out of your hard-earned shares.