Capital Gains Tax for Shares

[Pipsmum]

Thank you so very much. I'll persevere.

I'll check what shares I put on 2018's as well.

Really appreciating the help, and thanking you all.

[PinkDalek]

I'm having real problems understanding the disposal rules order of tax return entries. I'm trying to fill in a self assessment form for capital gains.

I've read this thread carefully and I'm not in the league of all those of you with huge CGT bills, as all of my calcs are way, way below the allowance thresholds. However some of them are outside the ISA wrapper so presumably must go onto the form. ...

Which allowance thresholds and I wouldn't presume without knowing them?

Others can provide chapter & verse (& I'm certain Gengulphus has somewhere or other) but do look at what is said on the Notes https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874084/SA150_English_Notes.pdf.

Extract only (note the part about losses):

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 £48,000
• your chargeable gains before taking off any
losses were more than £12,000 ...

Depending on the numbers, you may not have to tick 'Yes' at Box 7 on the Tax Return at all https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874083/sa100_English_Form.pdf.

Extract only (my underlining):

7 Capital gains summary

If you sold or disposed of any assets (for example,
stocks, shares, land and property, a business), or had any
chargeable gains, read the notes to decide if you have
to fill in the ‘Capital gains summary’ page. If you do,
you must also provide separate computations.
Do you need to fill in the ‘Capital gains summary’ page
and provide computations?

[PinkDalek]

Re the question, were there sales in the earlier tax years since 2018? If so how were these calculated/ reported if they were required to be reported? If losses not claimed then amending 2018/2019 is urgent (31st January deadline re in time revision) ...

Is the four year rule no longer applicable or have I misunderstood/forgotten the intricacies (genuine question)?:

Reporting losses

Claim for your loss by including it on your tax return. If you’ve never made a gain and are not registered for Self Assessment, you can write to HMRC instead.

You do not have to report losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset.

From https://www.gov.uk/capital-gains-tax/losses

Edit: Maybe this answers:

When a claim is required to be made within a tax return, you are required to make the claim by 31 January following then end of the year of assessment. You are then allowed a further 12 months from the filing deadline to amend the return.

From https://www.rossmartin.co.uk/penalties-a-compliance/compliance/347-time-limits-for-assessment-and-claims

[bluedonkey]

The four year rule is a separate mechanism and requires an application to HMRC with reasons. The 2018/19 TR can be amended by 31/1/2021 without any reason having to be given, the amended return just takes the place of the original one.

[PinkDalek]

Got it thanks.

I think I’ve since seen that if you claim within those specified 4 years (not sure what you mean by ‘with reasons’), HMRC require one to amend the return in question, even if from, say, 3 years ago.

My point is therefore there is no immediate urgency for pipsmum before the end of this month.

[Pipsmum]

Thank you all. I will carry on with the attempts at understanding, but not worry if it doesn't go on if I can amend it anyway.

I feel like I'm at school with all the 'how many oranges do Janet and John have after they've sold two lemons' = Double Dutch!

[PinkDalek]

Thank you all. I will carry on with the attempts at understanding, but not worry if it doesn't go on if I can amend it anyway.

What hasn't been asked of you, I think, is this the only CGT disposal (the multiple buys & sells) you've made in the 2019-20 year or not?

If there are others and you need to complete the relevant section (did you see my reply here https://www.lemonfool.co.uk/viewtopic.php?p=381224#p381224?) then you need to take into account the Capital Loss on that one for this tax year (2019-20), as any loss would be knocked off any Gains in the year, in preference to using the Annual Exempt Amount and precluding any carry forward of the Capital Loss, unless they exceed the Gains.

Perhaps HMRC's wording is better than mine:

Using losses to reduce your gain

When you report a loss, the amount is deducted from the gains you made in the same tax year.

If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.

https://www.gov.uk/capital-gains-tax/losses

[Charlottesquare]

Got it thanks.

I think I’ve since seen that if you claim within those specified 4 years (not sure what you mean by ‘with reasons’), HMRC require one to amend the return in question, even if from, say, 3 years ago.

My point is therefore there is no immediate urgency for pipsmum before the end of this month.

Not sure re that re CGT losses, does overpayment relief not require tax to have actually been overpaid or gains over assessed, where no such CGT was paid or CG liability arose in the earlier year (Capital gains assessed as nil), and the loss claim was not intimated, do the four year overpayment relief rules (previously error or mistake) bite such that the non intimated CGT loss now carries forward?

Not an area of tax I ever have much to do with, so this may well be an incorrect interpretation.

https://www.gov.uk/hmrc-internal-manual ... /sacm12057

"A person can claim overpayment relief if they have overpaid or been over-assessed income tax, CGT or corporation tax for a tax year or accounting period. Relief is given by repayment or discharge of the tax. Some mistakes may lead to tax also being overpaid in a later period. Overpayment relief can only be claimed for the later period after tax has been overpaid or over-assessed in that later period.

Most losses, such as capital losses and income tax trading losses must be claimed whether they are carried back, set-off in year or carried forward, so overpayment relief is excluded under case A"

https://www.gov.uk/hmrc-internal-manual ... 0SACM12080.

"Case A is where the amount in the overpayment relief claim arises from a mistake concerning any other claim, election or notice, or capital allowances, see SACM12075."

As I said, not an area where I ever needed to deal with but frankly I would prefer relying on the 31st January 2021 deadline re 2018/2019 rather than the Overpayment Relief provisions.

[doug2500]

Helpful advice so far but to bring it back to a more basic level what I think I would do is break it down into tax years.

Go back to the tax year in which you first had a sale and work out any taxable gain using the same day, 30 day etc rules. Hopefully you won't have anything that should have been reported. This will leave you with a sec 104 holding of so many shares worth so much, bring this forward to the next tax year and repeat. If you have been trading in and out the sec 104 holding size and value will vary from year to year.

And then don't do it again, keep trading for an ISA!

[PinkDalek]

Got it thanks.

I think I’ve since seen that if you claim within those specified 4 years (not sure what you mean by ‘with reasons’), HMRC require one to amend the return in question, even if from, say, 3 years ago.

My point is therefore there is no immediate urgency for pipsmum before the end of this month.

Not sure re that re CGT losses, does overpayment relief not require tax to have actually been overpaid or gains over assessed ...

We've no idea if Pipsmum has any CGT liability whatsoever (unless I missed it somewhere), so any potential overpayment relief, as fascinating as it is, isn't really the point at the moment.

That's really why I asked the questions here, without response so far:

viewtopic.php?p=381224#p381224

[Pipsmum]

Oops, sorry. Missed the direct question there. I don't have any CGT due but was considering the voluntary aspect of realising losses to help with future tax gains. I'm not disposing of another CG asset either yet but am considering the possibility. Unless one can understand the rules, then they can't be utilised to advantage either.

[Alaric]

I'm not disposing of another CG asset either yet but am considering the possibility. Unless one can understand the rules, then they can't be utilised to advantage either.

If you don't make it complicated for yourself with repeated trading, the gain on each disposal is what you get by selling minus what you paid for it.

As it says in
https://www.gov.uk/capital-gains-tax/allowances

Capital Gains Tax allowances

You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount).

The Capital Gains tax-free allowance is:

£12,300

Under the right circumstances, you only have to tell HMRC in a Tax Return that your gains were less than the Annual Exempt Amount (AEA). detailed asset by assets disclosure not being required. Only if they ask might you have to demonstrate this in detail.

As I understand it, the "right" circumstances are where the gains ignoring losses don't exceed the AEA and the total proceeds don't exceed four times the AEA.

In the absence of any other means of financing an annual transfer of £ 20,000 into an ISA, selling existing shares up to AEA limits is an approach.

[Parky]

Oops, sorry. Missed the direct question there. I don't have any CGT due but was considering the voluntary aspect of realising losses to help with future tax gains. I'm not disposing of another CG asset either yet but am considering the possibility. Unless one can understand the rules, then they can't be utilised to advantage either.

If you have accumulated capital gains equal to or greater than the realised losses, and you take those gains in the same tax year, and the net gains are less than your capital gains allowance, you don't have to submit any capital gains information.

[Charlottesquare]

Got it thanks.

I think I’ve since seen that if you claim within those specified 4 years (not sure what you mean by ‘with reasons’), HMRC require one to amend the return in question, even if from, say, 3 years ago.

My point is therefore there is no immediate urgency for pipsmum before the end of this month.

Not sure re that re CGT losses, does overpayment relief not require tax to have actually been overpaid or gains over assessed ...

We've no idea if Pipsmum has any CGT liability whatsoever (unless I missed it somewhere), so any potential overpayment relief, as fascinating as it is, isn't really the point at the moment.

That's really why I asked the questions here, without response so far:

viewtopic.php?p=381224#p381224

No we do not, all we know is ten sales from January 2018 over two years, if the earlier tax years ended up with net losses to benefit from said losses needs them first calculated and then, if required, notified to HMRC to either notify reportable gains or claim appropriate losses, but until the gains and or losses are computed year by year nothing else is certain, my earlier point was merely, like Lady Macbeth,

"If it were done when ’tis done, then ’twere well It were done quickly:"

[PinkDalek]

Oops, sorry. Missed the direct question there. I don't have any CGT due but was considering the voluntary aspect of realising losses to help with future tax gains. I'm not disposing of another CG asset either yet but am considering the possibility. Unless one can understand the rules, then they can't be utilised to advantage either.

If you have accumulated capital gains equal to or greater than the realised losses, and you take those gains in the same tax year, and the net gains are less than your capital gains allowance, you don't have to submit any capital gains information.

If I've understood what you have written, not quite.

You need to look at the in year gains first, to see if the Annual Exempt Amount would have been exceeded, before you deduct any in year losses. If exceeded, then the CG Summary etc requires completion, again as per viewtopic.php?p=381224#p381224, even if no CGT becomes payable.

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 £48,000

• your chargeable gains before taking off any
losses were more than £12,000 ...

From what Pipsmum has now said, that seems unlikely but without precise numbers we can't be sure.

As Charlottesquare and others have explained, it would appear to be necessary to work through year by year, which is what Pipsmum is attempting.

[Pipsmum]

I just can't thank you all enough for all the help and pointers. I'm pretty sure, with a rough ready reckoning, that I don't need to do it this year now. I have slightly lower losses than gains so the figures (done by ordinary school maths and not tax maths) are pretty equal and not at all high. Even if I've got it badly wrong, I don't think my figures are gainful enough to bother any tax inspector.

However it has meant such a huge learning curve that I got bloody mindedly curious as to why it is so difficult to understand, when previously I had considered myself reasonably intelligent.

I have for the last three days put myself back into 'school'. I have taken each available worksheet and steadfastly exhausted each one I've looked at with a step by step self-led 'lesson' by running through their examples one by one using exactly the figures they've given, on a spreadsheet. There are inconsistencies on each worksheet so far (some actually mathematic). No wonder it's not so easy to 'get it' straight away as a CGT newb.

On the government site:-
The + being a x on one example = adding a £1 to each calculation.

This maths on another spreadsheet (AF1 CGT 2020/21) part 4: Share Matching rules, example on p2 doesn't take into account the 0.333333 aspect of division so when copying a spreadsheet calculus number, rather than slavishly copying the spreadsheet example given number as wrote, gives a £10.33333 difference to the total. Might matter if one is calculating millions (I wish). 16,000/30,000 x £23,500 = £12,523 on the sheet. (No it doesn't. It equals £12533.33 recurring)

The same worksheet on page 5 at the bottom states, - 2. 'Disposal matched with acquisitions in the next 30 days on a "first in first out" basis. = Then proceeds to give each calculation example seemingly matching a 'next in previous out' basis. No wonder it was hard to understand.

I think I might fully understand what the tax office are asking for now, but it's taken some severe brain breaking, and appears quite illogical when one is ignorant of the 'why'.

Best to just do it the gov. method anyway in future on my own worksheets to avoid problems later...

Thank you for the help and advice. It was really supportive and kind.

[Parky]

Oops, sorry. Missed the direct question there. I don't have any CGT due but was considering the voluntary aspect of realising losses to help with future tax gains. I'm not disposing of another CG asset either yet but am considering the possibility. Unless one can understand the rules, then they can't be utilised to advantage either.

If you have accumulated capital gains equal to or greater than the realised losses, and you take those gains in the same tax year, and the net gains are less than your capital gains allowance, you don't have to submit any capital gains information.

If I've understood what you have written, not quite.

You need to look at the in year gains first, to see if the Annual Exempt Amount would have been exceeded, before you deduct any in year losses. If exceeded, then the CG Summary etc requires completion, again as per viewtopic.php?p=381224#p381224, even if no CGT becomes payable.

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 £48,000

• your chargeable gains before taking off any
losses were more than £12,000 ...

From what Pipsmum has now said, that seems unlikely but without precise numbers we can't be sure.

As Charlottesquare and others have explained, it would appear to be necessary to work through year by year, which is what Pipsmum is attempting.

Thanks PD for the chapter and verse - very thorough as usual.

[scrumpyjack]

I just can't thank you all enough for all the help and pointers. I'm pretty sure, with a rough ready reckoning, that I don't need to do it this year now. I have slightly lower losses than gains so the figures (done by ordinary school maths and not tax maths) are pretty equal and not at all high. Even if I've got it badly wrong, I don't think my figures are gainful enough to bother any tax inspector.

However it has meant such a huge learning curve that I got bloody mindedly curious as to why it is so difficult to understand, when previously I had considered myself reasonably intelligent.

I have for the last three days put myself back into 'school'. I have taken each available worksheet and steadfastly exhausted each one I've looked at with a step by step self-led 'lesson' by running through their examples one by one using exactly the figures they've given, on a spreadsheet. There are inconsistencies on each worksheet so far (some actually mathematic). No wonder it's not so easy to 'get it' straight away as a CGT newb.

On the government site:-
The + being a x on one example = adding a £1 to each calculation.

This maths on another spreadsheet (AF1 CGT 2020/21) part 4: Share Matching rules, example on p2 doesn't take into account the 0.333333 aspect of division so when copying a spreadsheet calculus number, rather than slavishly copying the spreadsheet example given number as wrote, gives a £10.33333 difference to the total. Might matter if one is calculating millions (I wish). 16,000/30,000 x £23,500 = £12,523 on the sheet. (No it doesn't. It equals £12533.33 recurring)

The same worksheet on page 5 at the bottom states, - 2. 'Disposal matched with acquisitions in the next 30 days on a "first in first out" basis. = Then proceeds to give each calculation example seemingly matching a 'next in previous out' basis. No wonder it was hard to understand.

I think I might fully understand what the tax office are asking for now, but it's taken some severe brain breaking, and appears quite illogical when one is ignorant of the 'why'.

Best to just do it the gov. method anyway in future on my own worksheets to avoid problems later...

Thank you for the help and advice. It was really supportive and kind.

It's a lot simpler now than it used to be, what with indexation relief, shares held at 31.3.82, share identification rules, share held at 1965 (when CGT was introduced), etc, etc.

Maybe Rishi will complicate it again in the next budget, what with the OTS suggesting capital gains be taxed as income but with inflation adjustment etc. Perhaps indexation relief will come back?

[Rajput1962]

I've read this thread with interest as i'm interested in knowing and calculating what any CGT liability might be. I've posted my reply in this thread viewtopic.php?f=49&t=27661 and others may find it useful to know that i use Microsoft Money to track my investment buys/sells and to then calculate any gains/losses. It works!

There is a Capital Gains Tax Report already set up which shows investment name, quantity bought/sold, date, sale proceeds, purchase costs, and gain/loss. Of course it requires that you input all the details in the first place! but very easy to use!

[PinkDalek]

I've read this thread with interest as i'm interested in knowing and calculating what any CGT liability might be. I've posted my reply in this thread viewtopic.php?f=49&t=27661 and others may find it useful to know that i use Microsoft Money to track my investment buys/sells and to then calculate any gains/losses. It works!

There is a Capital Gains Tax Report already set up which shows investment name, quantity bought/sold, date, sale proceeds, purchase costs, and gain/loss. Of course it requires that you input all the details in the first place! but very easy to use!

I appreciate you wrote that before seeing the reply from Gengulphus over there but it (his reply) should be borne in mind by anyone finding this thread but not reading the other one:

viewtopic.php?p=384269#p384269

It commences:

Sounds wonderful - for someone dealing with the US taxman! Or at least, I think I've read somewhere that the US taxman allows people to match their sales to their purchases in a variety of ways, including (at least) those four.