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Where Taxpayers and Advisers Meet

Capital Gains Help Please

paultomargson77
Posts:5
Joined:Thu Jul 13, 2017 5:58 pm
Capital Gains Help Please

Postby paultomargson77 » Thu Jul 13, 2017 6:00 pm

Hello Folks,

I have been reading the advice given by HMRC to work out my capital gains and losses on shares i had listed on the London Stock Exchange. I understand that depending on when shares are sold they are subjected to certain pools for instance, shares bought and sold on the same day, shares acquired within the 30 days following the sale and the Section 104 holding.

Basically i understand alot of this but please wondered if anyone had an example of how this would be calculated. I have bought shares on different days and sold some shares on different days from the same company. Could anyone please help me by clarifying this example.

1st July - Bought 500 shares costing £1.00 a share
15th July - Bought 250 shares costing £1.10 a share
28th July - Bought 100 shares at £1.50 a share

1st July - Sold 100 shares at £0.80 a share
23rd July - Sold 200 shares at £1.00 a share
15th September - Sold 50 shares at £1.20 a share

From this i have sold some shares on the same day rule, some within the 30 days and a transaction on the Section 104 holding. I have made a loss overall on my shares and please wanted someone who could provide clarification of the calculation needed. I have spoken to HMRC on the phone and the adviser simply read out information from the HMRC website which was not helpful.

I do have an accountant but sadly they are on holiday at the moment. If anyone could help i would be so grateful. Thank you so much for your time and for reading this post.

Many thanks,

Paul

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Capital Gains Help Please

Postby maths » Thu Jul 13, 2017 8:06 pm

Not really my scene but suggest:

1 July sale of 100 matched with 100 of 500 shares purchased on 1 July

23 July sale of 200 matched with 100 bought on 28 July and 100 bought on 15 July (LIFO)

15 September sale of 50 matched with 50 bought on 28 July (LIFO)


This leaves unmatched for future matching 1 July 400 and 15 July 100.

paultomargson77
Posts:5
Joined:Thu Jul 13, 2017 5:58 pm

Re: Capital Gains Help Please

Postby paultomargson77 » Thu Jul 13, 2017 11:19 pm

Thank you so much maths, greatly appreciated, if only the advice from HMRC was as clear as the information from you.

Sorry to ask are you kindly able to explain why you matched the shares up as you have done? Lastly are you able to quickly show the calculations after matching these shares up to show the loss and how this is worked out please?

I believe the number of shares sold is divided by the number of shares in a pool if i have read the HMRC guidance correctly. I appreciate your time it has made it alot clearer for future reference too.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Capital Gains Help Please

Postby maths » Fri Jul 14, 2017 12:25 pm

Think my earlier post was based on my knowledge when taper relief applied to CGT!

Had a quick look at legislation and LIFO no longer relevant post taper relief abolition; instead s104 pool applies.
Seems to me pool consists of shares acquired pre the date of the disposal

Take first sale on 1 July.

Identify shares sold with any purchased on same day.

Take second sale on 23 July. There were no same day purchase. Identify shares bought in next 30 days. As there are insufficient shares to match then need also to match with shares in the pool

Take third sale on 15 September. No same day or shares bought in next 30 days. Match with shares in the pool.

1 July sale of 100 matched with 100 of 500 shares purchased on 1 July [ 100 x £0.8 less 100/500 x £500= (£20)]

23 July sale of 200 matched with 100 bought on 28 July and 100 in the pool [200 x £1 less £775/750 x 100 = £67]

15 September sale of 50 matched with 50 in the pool [50 x £1.20 less £775/750 x 50 = £9]

Some advisors do this all day long; wait and see who else provides a response.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains Help Please

Postby bd6759 » Fri Jul 14, 2017 6:06 pm


paultomargson77
Posts:5
Joined:Thu Jul 13, 2017 5:58 pm

Re: Capital Gains Help Please

Postby paultomargson77 » Thu Jul 20, 2017 4:43 pm

Think my earlier post was based on my knowledge when taper relief applied to CGT!

Had a quick look at legislation and LIFO no longer relevant post taper relief abolition; instead s104 pool applies.
Seems to me pool consists of shares acquired pre the date of the disposal

Take first sale on 1 July.

Identify shares sold with any purchased on same day.

Take second sale on 23 July. There were no same day purchase. Identify shares bought in next 30 days. As there are insufficient shares to match then need also to match with shares in the pool

Take third sale on 15 September. No same day or shares bought in next 30 days. Match with shares in the pool.

1 July sale of 100 matched with 100 of 500 shares purchased on 1 July [ 100 x £0.8 less 100/500 x £500= (£20)]

23 July sale of 200 matched with 100 bought on 28 July and 100 in the pool [200 x £1 less £775/750 x 100 = £67]

15 September sale of 50 matched with 50 in the pool [50 x £1.20 less £775/750 x 50 = £9]

Some advisors do this all day long; wait and see who else provides a response.
Thank you ever so much for getting back to me regarding these calculations. Are you please able to answer a few quick questions regarding these, this would really help me out.

1) Are you please able to clarify why you have used the calculations you have for each share trade, sorry to be a pain, but this would really help me out.
2) Would all the shares purchased go into the Section 104 holding or not all of them and why?
3) Do you have any guidance on how to calculate a gain or loss, under each rule, same day, bed and breakfasting and the section 104 holding?

Thank you so much for your help it is appreciated, as the guidance online and through the phone at HMRC is terrible.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains Help Please

Postby bd6759 » Fri Jul 21, 2017 10:18 am

There are special identifiction rules for disposals on the same day as acquisition and for acquisitions within 30 days of a disposal. These rules are to counteract "bed and breakfasting".

https://www.gov.uk/hmrc-internal-manual ... al/cg51560

The calculator in my earlier post takes these rules into account

http://www.cgtcalculator.com/

paultomargson77
Posts:5
Joined:Thu Jul 13, 2017 5:58 pm

Re: Capital Gains Help Please

Postby paultomargson77 » Fri Jul 21, 2017 2:19 pm

There are special identifiction rules for disposals on the same day as acquisition and for acquisitions within 30 days of a disposal. These rules are to counteract "bed and breakfasting".

https://www.gov.uk/hmrc-internal-manual ... al/cg51560

The calculator in my earlier post takes these rules into account

http://www.cgtcalculator.com/
Many thanks for your reply bd6759. Sadly the CGT calculator is displaying an error when i import transactions in the layout suggested.

I would have liked this system to have worked, as you can appreciate it is very time consuming trying to work this out yourself, especially with how complicated HMRC make calculating capital gains or losses.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains Help Please

Postby bd6759 » Fri Jul 21, 2017 2:49 pm

You are best to put the trades into a spreadsheet and either copy/paste ot import the the file. You must use all 7 columns (ncluding the charges and tax colums where zero values are needed.

Results generated from www.cgtcalculator.com

SUMMARY INFORMATION

Year CapitalGain Exemption UsePrevLosses TaperRelief ChargeableGain Tax*
-------------------------------------------------------------------------------------------
16-17 -75 11100 0 0 0 0

*Please note that tax values are based on capital gains only and assume zero income.

TRADE MATCHING INFORMATION

TAX_YEAR 16-17

1. SELL: 100 ABC on 01/07/2016 at £0.80 gives LOSS of £20.00
SAME DAY TRADE matches with:
BUY: 100 shares of 100 at price £1.00
CALCULATION: LOSS = £20.00 = ( 100 * 0.80 - 0.00)
- ( 100 * 1.00 + 0.00 + 0.00)

2. SELL: 200 ABC on 23/07/2016 at £1.00 gives LOSS of £60.00
Matches with:
BUY: 28/07/2016 100 ABC shares of 100 bought at £1.50
BUY: SECTION 104 HOLDING. 100 ABC shares of 250 bought at average price of £1.10
CALCULATION: Loss = £60.00 = ( 200 * 1.00 - 0.00 )
- ( 100 * 1.50 + 0.00 + 0.00 )
- ( 250 * 1.10 ) * ( 100 / 250 )

3. SELL: 50 ABC on 15/09/2016 at £1.20 gives GAIN of £5.00
Matches with:
BUY: SECTION 104 HOLDING. 50 ABC shares of 150 bought at average price of £1.10
CALCULATION: Gain = £5.00 = ( 50 * 1.20 - 0.00 )
- ( 150 * 1.10 ) * ( 50 / 150 )



CURRENT PORTFOLIO BID PRICE(£) GAIN/LOSS(£)

ABC 100 10.10 +900.00

Your portfolio is currently showing a capital GAIN of £900.00


STATISTICS

Total amount paid in stamp duty = £0.00
Total amount paid in broker's fees = £0.00

Total number of trades = 6
Total number of buys = 3
Total number of sells = 3

INFO FOR TAX RETURN

16-17: Disposal Proceeds = £340.00 , Allowable Costs = £415.00 , Disposals = 3
16-17: Year Gains = £5.00 Year Losses = £80.00

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains Help Please

Postby bd6759 » Fri Jul 21, 2017 2:50 pm

This is the raw data I used

B 01/07/2016 ABC 100 1.00 0.00 0.00
S 01/07/2016 ABC 100 0.80 0.00 0.00
B 15/07/2016 ABC 250 1.10 0.00 0.00
S 23/07/2016 ABC 200 1.00 0.00 0.00
B 28/07/2016 ABC 100 1.50 0.00 0.00
S 15/09/2016 ABC 50 1.20 0.00 0.00


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