Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to bruncher,mark88man,stirlo,johnstevens77,Rhyd6, for Donating to support the site

CGT more than 4 times exemption, but gain below allowance

Practical Issues
MrUnsure
Posts: 31
Joined: December 3rd, 2016, 9:26 pm
Has thanked: 1 time
Been thanked: 2 times

CGT more than 4 times exemption, but gain below allowance

#271564

Postby MrUnsure » December 16th, 2019, 8:01 pm

In the 19-20 tax year, I have sold shares worth £49K, which is more than 4 times the annual exemption. But the total gain is only about £2,500. I don't currently fill in a tax return. Do I really have to report this to HMRC? There is no tax to pay.

JohnB
Lemon Quarter
Posts: 1300
Joined: January 15th, 2017, 9:20 am
Has thanked: 110 times
Been thanked: 310 times

Re: CGT more than 4 times exemption, but gain below allowance

#271571

Postby JohnB » December 16th, 2019, 8:44 pm

According to the rules, yes.

MrUnsure
Posts: 31
Joined: December 3rd, 2016, 9:26 pm
Has thanked: 1 time
Been thanked: 2 times

Re: CGT more than 4 times exemption, but gain below allowance

#271573

Postby MrUnsure » December 16th, 2019, 8:52 pm

Can I use the real time CGT service or do I have to apply for self-assessment? If I can do real time, is there a template that I can use so that I can make sure I've got the formatting right and ensure that the presentation is how HMRC like it?

Lootman
Lemon Half
Posts: 7969
Joined: November 4th, 2016, 3:58 pm
Has thanked: 69 times
Been thanked: 1420 times

Re: CGT more than 4 times exemption, but gain below allowance

#271574

Postby Lootman » December 16th, 2019, 8:53 pm

JohnB wrote:According to the rules, yes.

Yes but if you failed to disclose that and no tax would have been due anyway, I struggle to imagine that HMRC would be too concerned.

Unless of course they wondered what else you might have forgotten or omitted. But then again there is a school of thought that says that you should draw as little attention to yourself as possible.

Anyone know what the rational basis, if any, is for the "four times" rule? That might be the key here.

JohnB
Lemon Quarter
Posts: 1300
Joined: January 15th, 2017, 9:20 am
Has thanked: 110 times
Been thanked: 310 times

Re: CGT more than 4 times exemption, but gain below allowance

#271576

Postby JohnB » December 16th, 2019, 9:06 pm

Presumably they don't want to be bothered with small gains, but start thinking that by the time you get to 4*allowance, there really might be a gain, so want to check your calculation.

Yes, they might not care here, on the small gain principle, but then they might put you on the "always needs a return" list for future years, which would be more of a pain. I used to dispose of <4x just to keep off their radar when PAYE.

DeepSporran
Posts: 13
Joined: April 4th, 2018, 4:07 pm
Has thanked: 10 times
Been thanked: 6 times

Re: CGT more than 4 times exemption, but gain below allowance

#271577

Postby DeepSporran » December 16th, 2019, 9:12 pm

According to the CGT pages on the HMRC site:

If your total gains are less than the tax-free allowance

......

You still need to report your gains in your tax return if both of the following apply:

• the total amount you sold the assets for was more than 4 times your allowance
• you’re registered for Self Assessment



So if you don’t currently submit a return by self assessment there’s no need to report your below-the-limit gain.

swill453
Lemon Quarter
Posts: 4063
Joined: November 4th, 2016, 6:11 pm
Has thanked: 317 times
Been thanked: 1393 times

Re: CGT more than 4 times exemption, but gain below allowance

#271579

Postby swill453 » December 16th, 2019, 9:21 pm

DeepSporran wrote:According to the CGT pages on the HMRC site:

If your total gains are less than the tax-free allowance

......

You still need to report your gains in your tax return if both of the following apply:

• the total amount you sold the assets for was more than 4 times your allowance
• you’re registered for Self Assessment



So if you don’t currently submit a return by self assessment there’s no need to report your below-the-limit gain.

Hmm being "registered for Self Assessment" isn't quite the same as "currently submit[ting] a return".

For example I'm registered, but have in the past been told by HMRC I don't need to submit a return unless my circumstances change.

Scott.

DeepSporran
Posts: 13
Joined: April 4th, 2018, 4:07 pm
Has thanked: 10 times
Been thanked: 6 times

Re: CGT more than 4 times exemption, but gain below allowance

#271582

Postby DeepSporran » December 16th, 2019, 9:29 pm

Good point.

PinkDalek
Lemon Half
Posts: 5597
Joined: November 4th, 2016, 1:12 pm
Has thanked: 1425 times
Been thanked: 1592 times

Re: CGT more than 4 times exemption, but gain below allowance

#271583

Postby PinkDalek » December 16th, 2019, 9:29 pm

JohnB wrote:According to the rules, yes.


No.

Gersemi
2 Lemon pips
Posts: 133
Joined: November 4th, 2016, 3:57 pm
Has thanked: 265 times
Been thanked: 46 times

Re: CGT more than 4 times exemption, but gain below allowance

#271584

Postby Gersemi » December 16th, 2019, 9:32 pm

JohnB wrote:According to the rules, yes.


Which rules? According to the link here:

https://www.gov.uk/self-assessment-tax- ... tax-return

it doesn't meet any of the criteria and if you complete the https://www.gov.uk/self-assessment-tax- ... tax-return tool it isn't a question asked. Where does it say you have to report proceeds of more than four times the annual exemption if you don't have to fill in a tax return?

PinkDalek
Lemon Half
Posts: 5597
Joined: November 4th, 2016, 1:12 pm
Has thanked: 1425 times
Been thanked: 1592 times

Re: CGT more than 4 times exemption, but gain below allowance

#271591

Postby PinkDalek » December 16th, 2019, 11:22 pm

Gersemi wrote:[Where does it say you have to report proceeds of more than four times the annual exemption if you don't have to fill in a tax return?


It doesn’t and shouldn’t, as you note.

My earlier “No” was brief, as I was out, but this issue is mentioned on here from time to time, yet still appears to be misunderstood by some regulars.

The 4 x Annual exempt amount question is only relevant for when one is required to complete a Tax Return and needs to consider the questions asked in the main Tax Return SA100.

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/829400/SA100.pdf where question 7 asks Do you need to fill in the ‘Capital gains summary’ page and provide computations?.

It then suggests one looks at the notes which are here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/787630/SA150_2019.pdf.

The relevant note commences:

7 Capital gains summary

Fill in the ‘Capital gains summary’ pages and
attach your computations if:
• you sold or disposed of chargeable assets which
were worth more than £46,800
• your chargeable gains before taking before taking off any
losses were more than £11,700
• you want to claim an allowable capital loss ...


Both those links are for 2018-19 and the numbers are for that tax year but the answer for the OP is no, not in the circumstances described, as one only gets to those notes if one has to fill in a Tax Return (for whatever reason but total disposal proceeds is not one of those reasons) and not before.

MrUnsure
Posts: 31
Joined: December 3rd, 2016, 9:26 pm
Has thanked: 1 time
Been thanked: 2 times

Re: CGT more than 4 times exemption, but gain below allowance

#271702

Postby MrUnsure » December 17th, 2019, 12:05 pm

Thanks for the many replies and for the good news.

scrumpyjack
Lemon Quarter
Posts: 1272
Joined: November 4th, 2016, 10:15 am
Has thanked: 92 times
Been thanked: 493 times

Re: CGT more than 4 times exemption, but gain below allowance

#271711

Postby scrumpyjack » December 17th, 2019, 12:48 pm

One should note that not all the things demanded by HMRC for a tax return are based on statute.

Looking at HMRC's links to the statutory basis for information demanded for the tax return, you do not need to complete CGT information if you are below the annual exemption but the statutory basis makes no mention of the 4 x disposals amount

https://www.gov.uk/hmrc-internal-manual ... rk/salf210

I suspect it is another HMRC fishing expedition with no legal basis!

PinkDalek
Lemon Half
Posts: 5597
Joined: November 4th, 2016, 1:12 pm
Has thanked: 1425 times
Been thanked: 1592 times

Re: CGT more than 4 times exemption, but gain below allowance

#281352

Postby PinkDalek » January 31st, 2020, 11:55 am

scrumpyjack wrote:One should note that not all the things demanded by HMRC for a tax return are based on statute.Looking at HMRC's links to the statutory basis for information demanded for the tax return, you do not need to complete CGT information if you are below the annual exemption but the statutory basis makes no mention of the 4 x disposals amount ...

I suspect it is another HMRC fishing expedition with no legal basis!


I'm bumping this thread as the issue has been raised elsewhere and I may attempt to come back to it here.

MaraMan
Lemon Slice
Posts: 289
Joined: November 22nd, 2016, 3:30 pm
Has thanked: 77 times
Been thanked: 123 times

Re: CGT more than 4 times exemption, but gain below allowance

#333878

Postby MaraMan » August 17th, 2020, 3:41 pm

I have a very similar situation, however it relates to the 2017/8 tax year, for which I did have some accountant help with. The trouble is that I wasn't aware of the 4x issue as my capital gain was well below the CGT allowance, although the overall amount was more than £45K. I don't know if I told the accountant, probably not. I was not having a good year one way and another. Anyway I have just had a letter from HMRC about tax liability from overseas gains. Am I likely to get fined if I just disclose it now and say it was overlooked?

MM

Steveam
2 Lemon pips
Posts: 249
Joined: March 18th, 2017, 10:22 pm
Has thanked: 231 times
Been thanked: 112 times

Re: CGT more than 4 times exemption, but gain below allowance

#334065

Postby Steveam » August 18th, 2020, 10:29 am

Some years ago I had a similar situation (although I spotted it before HMRC) but when I wrote explaining they were very pleasant about it. I’m really not sure if I was within some correction period or not but no tax was due and no fine was imposed.

Best wishes,

Steve

MaraMan
Lemon Slice
Posts: 289
Joined: November 22nd, 2016, 3:30 pm
Has thanked: 77 times
Been thanked: 123 times

Re: CGT more than 4 times exemption, but gain below allowance

#334102

Postby MaraMan » August 18th, 2020, 12:35 pm

Thanks Steve, will hope they see it as a genuine error and of no interest as no tax payable. Fingers crossed.

MM


Return to “Taxes”

Who is online

Users browsing this forum: No registered users and 12 guests