This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Returns from third party shares

Joeblogs
Posts: 2
Joined: Fri Aug 16, 2019 12:30 pm

Returns from third party shares

Postby Joeblogs » Fri Aug 16, 2019 12:45 pm

Hi,

I have an investment opportunity coming up with a close friend of mine. He currently trades in the stock market and consistently makes a good profit. He is willing to invest a relativly small amount of money for me with his personal account. The returns from this investment could exceed 200k a year and I'm concerned about the tax implications.


a) will I need to pay tax on my return? If so which tax law applies?
b) what type of documentation would be required to pay this tax?
c) how would I prove my original asset value if i gave him this to him in cash?
d) I'm obviously willing to pay any tax required. Do you think simply doing a cgt payment on the full amount returned would suffice? This sounds like the easiest approach.

Thanks in advance
Tony

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Returns from third party shares

Postby Jholm » Fri Aug 16, 2019 1:21 pm

Generally, the income generated will be subject to income tax, whether dividends, interest, REITs etc. Any decent stockbroker would provide an annual tax summary to assist completing a tax return.

Sales of shares would be subject to CGT. Again the price at purchase and the proceeds at sale would be relevant for calculating capital gains tax. Likewise, annual reports are often generated.

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Returns from third party shares

Postby Jholm » Fri Aug 16, 2019 1:22 pm

P.S. the original asset value for CGT is not the cash you give him but the cost of subsequent acquisitions.

Joeblogs
Posts: 2
Joined: Fri Aug 16, 2019 12:30 pm

Re: Returns from third party shares

Postby Joeblogs » Fri Aug 16, 2019 1:40 pm

Thank you very much for your response. Would it still be classed as income if the money is sent only once every few months?

Jholm
Posts: 103
Joined: Mon Mar 11, 2019 4:22 pm

Re: Returns from third party shares

Postby Jholm » Fri Aug 16, 2019 2:29 pm

You would pay tax on it as it arises to the fund, regardless of when you receive the payments, i.e. dividends received from 6 April 2019 to 5 April 2020 by the fund would be taxable on you for the 19/20, even if you receive an income distribution after this date.

AGoodman
Posts: 888
Joined: Fri May 16, 2014 3:47 pm

Re: Returns from third party shares

Postby AGoodman » Fri Aug 16, 2019 2:56 pm

I feel somebody should contribute the obligatory "Why?",

For those sums of money (presumably in excess of £1m) why not have your own account and allow him to access it or just act on his advice. If he is promising 20%+ consistently then you really should get some proper advice before committing anything. Professional managers would never claim a target of anything like this.

pawncob
Posts: 4392
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Returns from third party shares

Postby pawncob » Sat Aug 17, 2019 7:23 pm

If you give him cash he'll need to make a MLR report (assuming he's legit!!) :lol:
With a pinch of salt take what I say, but don't exceed your RDA

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Returns from third party shares

Postby wamstax » Sun Aug 18, 2019 10:48 am

If there was any suggestion that you invest in cash then I would ensure that you are comfortable losing a £1m as it smacks of shadiness and I would rethink the whole proposal and a good bit more
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website


Return to “Capital Gains Tax, CGT”