Capital Gearing Share Discussion Threads

[gengulphus] 21/2/2021 12:57

s2lowner1, Moving on to: I have records of share contract notes (tax invoice) going back 20 years which are bulky so was wondering what year can I shred them upto and what would I need to keep to prove my historic reported HMRC losses if required to do so ? I have submitted yearly returns recording the losses with spreadsheet back up which have never been contested and: HMRC says Businesses must keep records for 5 years after the deadline. but I can't see anywhere it says the same for personal CGT losses. My view is that a CGT event happens when you sell, and that you need to keep the documentary evidence for all the inputs to the gain/loss computation for that CGT event until enough time has gone by since the sale. So I would keep all documentary evidence about open positions indefinitely, and about closed positions until enough years have gone by since they were closed. I'm not certain how many years is enough, but the largest number I've seen mentioned is troutisout's 7 years. I do realise that where paper records are concerned, that can result in quite bulky records - I've got records myself that in the case of one open position go back about 37 years! Fortunately, they're not accumulating at anything like the rate they once were, as most stuff is done electronically these days. And I think one could make a good case for scanning one's old paper records and any new ones that do arrive, which allows all the records to be held electronically and in a consistent filing system. Then the paper originals just get put in a box labelled with the tax year and stashed away somewhere out of the way, and then destroyed say 7 years later. And the electronic copies are much less bulky... The main problem is that if one accumulated a lot of paper records before share investing became mainly electronic (or has been reluctant to be a guinea pig for new systems, preferring to let them bed in for a number of years), quite a lot of scanning can be required... Gengulphus

[gengulphus] 21/2/2021 12:18

s2lowner1, As I understand 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. But you can use recorded losses as far back as before 1996 The whole business of reporting and using losses is a bit complex, and I can't really tell from what you say whether you've understood it correctly or not. So I'd better lay it out as best I can: * A taxable gain or loss (neither gains and losses made inside ISAs and SIPPs are taxable) is 'realised' on a specific date - normally the date on which you sell the shares or otherwise transfer them to someone else's possession (e.g. as a gift), though there are a few other ways of determining the date (e.g. the date you name within a negligible value claim). You fix it at the time you sell (or give them away, make the negligible value claim, etc) and that is the date on which they enter your CGT affairs. * You 'claim' a loss by declaring its details to the taxman during the tax year during which it is realised or one of the following 4 tax years. If you don't claim it in that time period, it becomes forever unusable. Exceptions: Losses realised in the 1995/1996 tax year or before have no time limit on when they can be claimed. Also, if I remember correctly, losses realised in tax years between 1996/1997 and 2003/2004 could be claimed up to the January 31st about 5 years and 10 months after the end of the tax year in which they were realised, and losses realised in the 2004/2005 tax year could be claimed up to the end of the 2009/2010 tax year. It's not guaranteed that I've remembered those past details correctly - but I'm not going to try to look them up because all they affect is the validity of loss 'claims' made in the past. As far as the present situation is concerned, losses realised in the 1995/1996 tax year or before can be claimed; losses realised in the tax years from 1996/1997 to 2015/2016 cannot be claimed; losses realised in the 2016/2017 tax year through to the 2020/2021 tax year can be claimed (though there's only about six weeks left in which losses realised in the 2016/2017 tax year can be claimed - on April 6th, they cease to be claimable). * It is important to understand that while you can delay claiming a loss, that doesn't alter the date that it is realised and enters your CGT affairs. E.g. if you realised a loss in the 2016/2017 tax year and only claim it now, it's not automatically usable in a 2019/2020 tax return that you're submitting now: basically, you first need to revisit your 2016/2017 tax return. Then if that revisit changes the losses you carry forward into 2017/2018, you need to revisit your 2017/2018 tax return. Then if that second tax return revisit changes the losses you carry forward into 2018/2019, you need to revisit your 2018/2019 tax return. Then if that third tax return revisit changes the losses you carry forward into 2019/2020, it actually affects the tax return you're submitting now. In particular, if the loss realised in 2016/2017 would have been completely used up against gains realised in 2016/2017 and those gains were covered by your 2016/2017 CGT allowance anyway, then none of them get carried forward to any of the later tax years, and so the loss doesn't affect the tax return you're submitting now. * The normal way to claim a loss is in the tax return for the year in which it was realised, and of course you normally prepare and submit that tax return in the year following the year in which it was realised. If you're required to fill in that tax return and to include its capital gains section and computations, then that section and computations are covered by your declaration that the tax return is complete and correct to the best of your knowledge and belief. I.e. if you're obliged to fill in a tax return including capital gains details, then deliberately failing to claim a loss realised in the tax year concerned involves making a false declaration - which is something you can get into trouble for. Of course, it's possible to make an inadvertent mistake - but if you do and it comes to light, don't be surprised if the taxman asks you to explain how it came about. * Looked at another way, the 4-year period for claiming losses isn't really intended to be used by those who normally have to deal with CGT. It's mainly there for those who haven't had to deal with CGT before, or only very occasionally have to. * As far as how losses are used, you normally simply have to follow some fixed rules, without being able to make any choices. You start knowing the total G of the taxable gains realised in the tax year, the total L of the taxable losses realised in the tax year (excluding any that weren't claimed in time), the total B of the losses brought forward from the previous tax year, and the CGT allowance A for the tax year. The fixed rules can be summarised as "first use same-year losses, then CGT allowance, then brought-forward losses" - in precise detail, they are: 1) If L > G, then all gains are wiped out by same-year losses, and you have surplus same-year losses of L-G. You carry those surplus same-year losses forward into the next tax year, along with all brought-forward losses. So you have no taxable net gains to be taxed, and the losses carried forward into the next tax year are B+L-G. 2) Otherwise, all the same-year losses are used up reducing your net gains to G-L. If they're within the CGT allowance, i.e. if G-L <= A, then the CGT allowance reduces them to zero, and the brought-forward losses are untouched. So you are left with no taxable net gains to be taxed, and the losses carried forward into the next tax year are just B. 3) Otherwise, the CGT allowance is also all used up, reducing your net gains to G-L-A, which is still positive. If they're less than or equal to the brought-forward losses, i.e. if G-L-A <= B, then enough of the brought-forward losses are used up to reduce them to zero. So you are left with no taxable net gains to be taxed, and the losses carried forward into the next tax year are B-(G-L-A). 4) Otherwise, the brought-forward losses are also all used up, and you still have net gains. So you have G-L-A-B taxable net gains to be taxed, and the losses carried forward into the next tax year are zero. * I said "normally" above because there are some unusual cases (such as 'clogged losses') where a loss can be used, but only in certain ways. In those cases, you might get a choice about whether you consider using those losses before or after other losses which ends up affecting which losses get used and which don't. But I don't know any details about that - not even whether you actually get such a choice - so this is basically just to say that I cannot say that people never get any choice about how to use losses, just that they normally don't. Gengulphus

[pedr01] 18/2/2021 07:14

Good to know that you are fit and healthy G ...

[gengulphus] 17/2/2021 22:22

bunlop, Redcentric (RCN) paid shareholders compensation for people who purchased shares between 9/11/15 and 7/11/16. I sold all my holding on 7/11/16. But I have now been paid £1305 compensation which I received on 06/8/20 following an agreement between Reedcentic and the FCA. Is this subject to tax and if so what tax and how do I declare it? Sorry I haven't been around for so long - various personal matters have distracted me from coming here for so long that I've got out of the habit... But you haven't lost out as a result, because I'm afraid I have no idea about the answer to your question! Basically, it's not a situation I've ever experienced myself, nor something I happen to have come across while investigating something else. Gengulphus

[lozzer69] 03/2/2021 09:32

Thanks for your comments and I think I will try both cgt and pnl . I was in Rcp for years but left as disappointed it's with pandemic performance and also fees are high.

[panshanger1] 02/2/2021 08:25

CGI definitely racier !!But a different animal Skyship - CGT is a wealth preservation trust as is Personal Assets, they have a very sizeable allocation to government bonds and US treasuries or example Go back a bit further and see how CGT behaved in 2008 and through other large market corrections Of course that's not to say you can't own CGI as well all depends how you want to structure your portfolio

[skyship] 01/2/2021 15:24

CGT - RACIER!!! Sorry panshanger, but surely you're setting your targets far too low.... # Premium = 2.4% # Yield = 0.9% # NAV growth: 3yr @ 3.9%pa; 5yr @ 8.5%pa; 10yr @ 7.0%pa I just can't figure why you would accept such performance. Try CGI...Geo. diversification to Canada - great performance, yet still trading on a 30% discount & 3.5% yield. Worth a look to where the grass is greener...

[panshanger1] 01/2/2021 14:21

I think CGT is a little bit racier - not much, I hold both and have done for many years I also have a smallish allocation to RIT capital which operates in a similar way but is more volatile with its unquoted holdings - still always happy to invest alongside the Rothschild family ( ex Nat who's not involved)

[s2lowner1] 28/1/2021 17:45

Thanks troutisout I will do another search before I shred

[troutisout] 28/1/2021 15:55

If you carry them forward each year on CGT part of tax return they are with you for as long as you don't need them. It will tell you on the HMRC website, but I think the suggestion is you keep tax records going back 7 years.

[s2lowner1] 28/1/2021 15:52

As I understand 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. But you can use recorded losses as far back as before 1996 HMRC says Businesses must keep records for 5 years after the deadline. but I can't see anywhere it says the same for personal CGT losses.

[arab3] 28/1/2021 15:31

I thought it was only 4 years, will check

[orchestralis] 28/1/2021 15:25

I think I read somewhere that you can only claim losses in the last 6 year period, anything before that can't be.

[s2lowner1] 28/1/2021 15:20

Hello I wonder if you could advise re record keeping I have CGT losses which I carry forward each year that may be useful to me as gains are taken off accrued losses first before annual CGT allowance. I intend to use these against gains where I buy outside of my ISA and Sipp, to provide additional retirement income as dividends or taking gains. I have records of share contract notes (tax invoice) going back 20 years which are bulky so was wondering what year can I shred them upto and what would I need to keep to prove my historic reported HMRC losses if required to do so ? I have submitted yearly returns recording the losses with spreadsheet back up which have never been contested Thanks s2lowner1

[lozzer69] 28/1/2021 11:06

How will the trust perform when Peter Sillar hangs up his boots. I want to buy a defensive trust to sit alongside Lifestrategy 20pc and it's this or PNL or both

[dean moriarty] 14/1/2021 10:49

I have never paid CGT. I may soon have to. Unfortunately I have lost the stock trading documents from previous deals, mostly loses, and brokers like Beaufort who I used have closed. Can you please tell me the best way to obtain copies to prove loses or do I submit recreated records mentioned by HMRC?

[prolapse] 29/12/2020 12:21

Thanks chaps, as I suspected. Thametrader, the reason is this. If you have already used some of your current year ISA allowance with broker A, but broker A does not trade stock on ASX were you might want to purchase a stock. Then you are forced to use broker B who does trade ASX, but then can't use up remaining ISA allowance to do so.

[zangdook] 29/12/2020 11:52

You're right, the answer is no. You might be able to put all the money in one account and then transfer some of it to another account later, but all the brokers I've been involved with seem to insist on transferring all or nothing. I don't know if there's a rule about that or if it's just the brokers being annoying.

[thamestrader] 29/12/2020 10:45

Even if you could, why would you? Two lots of fees, two apps, two everything. But anyway, I think the answer is no. You can only have one S&S ISA per year. You have to provide your NI number when you apply, and I think this is so they can easily check if you already have one for that year. Happy to be corrected on this if I'm talking rubbish (wouldn't be the first time).

[prolapse] 29/12/2020 10:26

Could anyone answer this question please. Can I use my annual stocks and shares ISA allowance for a specific year (this year) with more than one broker? For example £5K in an Barclays stockbroker ISA and £5K in a lloyds stockbrocker ISA.

[bunlop] 18/12/2020 18:59

Pedr01 - I am inclined to think that as the payment was for compensation for misleading me that it would be not subject to income or capital gains tax. However I am not 100% sure of this.

[pedr01] 15/12/2020 22:20

1166:- bunlop, In the absence of a "proper" answer from G, and given that it is effectively proceeds from RCN and you received monies this year, I would include a dummy buy/sale into my CGT calculations/summary sheets for this year, viz; Stonebanks pseudo => Dummy RCN (DRCN) ; Dummy buy/sale to adjust for £1305 payment 06/08/20, B, 1305, 0.0, 0.0 ; from RCN Shareholders Compensation scheme. 06/08/20, S, 1305, 100.0, 1305 ; Original RCN shares sold on 07/11/16 Is this correct? Who knows, but it is what I would be doing the circumstances unless advised otherwise. Originally I thought you should adjust your 2016-2017 calculations/tax return, but then you only received the money this year???

[bo doodak] 15/12/2020 12:43

Cheers serratia, its good to know I was worrying unnecessarily.

[serratia] 15/12/2020 10:54

I have 2 ISA's but only contribute to one of them each year. When I add to the one I didn't use in the previous year they just say ok we'll reactivate it. As long as you only contribute to one in a tax year you're ok. My wife has 2 as well.

[bo doodak] 15/12/2020 08:39

I'm currently with IWEB as well, so that's really useful to know. Thanks zangdook.