CGT Calculations

[ck]

I shall appreciate some help & guigance in calculating CGT on my BT & Cable & Wireless shares.

I bought BT & C&W shares on their privatisation . I received the dividend income for first 2 years thereafter I opted for Scrip Dividend instead of cash dividend.

So every year I received some additional BT & C&W shares twice a year as a result I had built up a substantial holdings.

In May of 2002 I sold the entire holdings in BT & C&W ( BT at £2.7578 and C&W at £2.026 )

What I want to know is how to calculate the total purchase price of both shares bearing in mind that BT was bought in stage payments on privatisation in 1986 and Scrip Dividends were allocated each Year at diffirent prices prevailing at the date of allocation.

Thank you for your help

[Huw Williams]

The basic idea is simple

1 if you received shares instead of a cash dividend, then you will have paid income tax on the dividend given up (higher rate tax only as scrip dividends come with a basic rate credit).

2 Whatever you had to show as income for tax purposes is what you paid for the shares you received.

The complications come from

a making sure you use the correct income figure - before grossing up for the tax credit and

b all the capital gains rules about indexation and taper relief.

If you cannot understand the Revenue leaflets on all this, I would suggest talking to a professional.

But of course it only matters if you have made a taxable gain of more than £7,700 and your disposal proceeds exceeded £15,400 in the year. Below these levels there is no tax to pay and nothing to tell the Revenue.

Huw Williams
enquiries@huwwilliams.co.uk