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Where Taxpayers and Advisers Meet

Understanding CGT liability loss and declaration

Carver100
Posts:4
Joined:Wed Mar 17, 2021 1:39 am
Understanding CGT liability loss and declaration

Postby Carver100 » Wed Mar 17, 2021 2:10 am

Hi

I find the CGT rules rather confusing and would be grateful for some help.

The 20/21 CGT allowance is £12,300. I have share sale gains of £14,000 and a loss of £3,000. When I offset the loss against gains, that leaves an overall gain of £11,000 so I am under the annual allowance.

1. Will I need to declare these gains and the loss when I make my tax return or do I not need to given that overall gain is within the annual allowance?

2. I have read about carrying forward unused losses to future years. To reduce my gain to the annual allowance figure I only need to use £1,700 of my £3,000 loss. Does the remaining £1,300 count as an unused loss that I can carry forward against potential gains in a future race year? (In which case I should definitely declare my gains and loss).

Many thanks

Jim

Ian Wright
Posts:298
Joined:Wed Aug 06, 2008 3:23 pm

Re: Understanding CGT liability loss and declaration

Postby Ian Wright » Tue Mar 23, 2021 1:55 pm

Hi Jim,

Current years losses and gains offset against each other automatically. So those losses you mention will be swallowed up leaving a gain of £11,000. Carried forward losses do not have to go against the annual exemption and thus can be preserved.

You only need to report capital gains or losses if your gains are above the annual threshold or the overall proceeds are 4 times the annual threshold. In 2010/21 this would be £49,200.

So, you have to report gains/losses if:

2020/21 rates
a) Total gains are above £12,300 or
b) Total proceeds are above £49,200

Regards

Ian
Ian Wright
Tax Consultant
Wright Tax Consultancy Ltd
Hampshire
UK

Carver100
Posts:4
Joined:Wed Mar 17, 2021 1:39 am

Re: Understanding CGT liability loss and declaration

Postby Carver100 » Wed Mar 24, 2021 10:39 pm

Hi Ian

Many thanks that's very helpful and if I understand the position correctly you would only have a loss to carry forward if your losses in a tax year exceeded your gains in the same year.

So if you had gains of £25,000 and losses of £30,000 in 2019/2020 you would have a £5,000 loss to carry forward to set against gains in a later tax year?

I had no notion of the total proceeds rule, so that is good to know if I trade more in later years.

All the best

Jim


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