Capital Gearing Share Discussion Threads

[6971] 25/5/2011 15:45

Gengulphus, thanks from me too. I have never been very clear regarding definitions of gifts and the associated rules. I'm feeling much better about it all after reading your explanation above.

Thanks to you too Worrier for asking the question.

[gengulphus] 25/5/2011 14:48

Yes - the MMMM/NNNN tax year runs from April 6th MMMM to April 5th NNNN, both ends included.

Gengulphus

[worrier] 25/5/2011 11:36

Thanks to all for your input. It looks like I have some flexibility to minimise the "family" CGT bill.
Worrier

[christianf12] 25/5/2011 10:53

Gen, I put some money in my isa on 5th April 2011, am I right in thinking this is classed as 2010/2011 tax year and not the current 2011/12?

Cheers

[christianf12] 25/5/2011 10:52

Gen, I put some money in my isa on 5th April 2011, am I right in thinking this is classed as 2010/2011 tax year and not the current 2011/12?

Cheers

[gengulphus] 25/5/2011 10:49

As far as I am aware, it can be done either by Worrier giving the profitable shares to his wife for her to realise both the gains on them and the losses on her loss-making shares, or by his wife giving her loss-making shares to him for him to realise both the gains and the losses. Either way, make certain the ownership of the shares has definitely changed hands as a result of the gift before selling - and it wouldn't do any harm to allow a little extra time between the transactions.

The standard 30-day rule applies to the one giving the shares away - they need to wait until at least 31 days after the gift before buying that type of share again if they want to avoid complications in the calculations and their spouse probably realising a different amount of gains/losses on the shares they were given than you might expect. They can however acquire the other type of share (the one that has only been in the hands of their spouse) without the 30-day rule applying. E.g. if Worrier has shares in WIN and his wife has shares in LOSS, his wife gives him the LOSS shares, and he sells both of them, then he has disposed of both types of share but his wife has only disposed of the LOSS shares (*) - so his wife can buy WIN shares immediately without running into the 30-day rule, but neither of them can buy LOSS shares without running into it. Do the gift the other way around and he can buy LOSS shares immediately but neither of them can buy WIN shares immediately without running into the 30-day rule. This can influence which direction the gift should be made if you really want to hang on to one type of share and are only selling it to cancel out the gain or loss on the other one.

The standard 30-day rule could also apply if the one being given the shares has sold that type of share within the last 30 days - that would again complicate the calculations and probably produce a different result than wanted. If by any chance that situation applies, the easiest fix is probably to wait until it's 31 or more days after the sale.

The other factor that may be relevant to the decision which way to make the gift is that if the gains minus the losses take the recipient of the gift over the CGT allowance, there may be different amounts of CGT to pay depending on which spouse has more CGT allowance available and which spouse is further below the higher-rate threshold on Income Tax.

Note also that any real fine-tuning of their use of their CGT allowances is best done in the last couple of months of the tax year, to avoid the risk of a takeover forcing extra gains or losses on you and disrupting all the fine-tuning. E.g. if the WIN shares stand on a gain of £20k and the LOSS shares on a loss of £10k, then all else being equal, ideally you leave both unsold until about February 2012 so that you keep the flexibility to change your plans if another share in your portfolio gets taken over before then. (But note that "all else being equal"! If e.g. the LOSS shares are clearly likely to drop even further in price, get them sold - getting 18% or 28% of the extra losses back in CGT saved is small consolation for the fact that you've lost 100% of them...)

(*) Yes, she really is counted as having disposed of them. The spouse exemption does not make any difference to whether the assets concerned have been disposed of by one spouse and acquired by the other when they're transferred: it just makes the transfer count as having occurred at the total of the transferor's costs, so that the transferor realises neither a gain nor a loss, and the recipient effectively "inherits" the transferor's costs.

Gengulphus

[david77] 25/5/2011 09:44

I think that she has to give the shares to you before you sell these (now your) shares - but there will be an expert along soon to give you a definite answer - unless they are both on holiday.

[6971] 25/5/2011 09:40

Can you not gift your gains to her, then there would be not concern regarding when she crystalises the loss. She could gift back to you at a later stage?

The only reason I'm suggesting this, is we found ourselves in a similar situation and that's how we did it. My broker wasn't particularly helpful but there was definitely some implication in selling shortly after receiving the gifted shares.

[david77] 25/5/2011 08:50

yes - she can 'gift' the share to you and no - I don't think that there is any restriction on selling - but I would wait until your broker has confirmed the transfer to you.

[worrier] 24/5/2011 21:51

Evening all, a quick query....

my spouse has made some serious losses on a share.
I have been making some decent gains and am likely to pay CGT at high rate this year.

Can my wife transfer (gift) her loss making stock to me, for me to trade and crystalize a loss which could offset some of my gains?
Is there a 30 day rule or "associated operations" implication?

Many thanks

Worrier

[sos100] 24/5/2011 09:00

thanks david

[david77] 24/5/2011 08:24

Double your original buy quantities and halve the unit price - leave costs as they are.
Add note to your CGT return to explain what you've done.

[sos100] 24/5/2011 06:59

can someone help me please ,one of my stocks GGG had a 2for 1 consolidation during the 10/11. How do input this into CGT calculator?

B 17/06/2010 GGG 49577 0.04 7.00 9.92
B 21/06/2010 GGG 48367 0.041 7.00 9.92

just a couple of lines from my trades ( there's more trasactions),at the moment i have twice as many shares because the consolidation ,how can iadjust this so that it keeps me straight for 11/12?

tia

ps this is probably one of the best threads around.

[nightspot] 23/5/2011 16:41

Gengulphus, Thank you very much for your reply to my post 6065 which I have only just seen after a weekend away. As you suspected, my post was cut off, but nevertheless your lucid reply and the HMRC link answered my question in full. I had thought that changes to CGT would mean that the period of ownership was no longer relevant but it seems that that only applies to shareholdings.

[david77] 23/5/2011 10:42

You simply add them as buys at the last dealing date at the start of the list of deals for each company. I have calculated CGT for each tax year and ignored the 30-day rule over year boundaries, but others seem to think that getting things dead right is important so I added the 'start' and 'end' buttons to specify the period for calcs - as long as your data extends at least 30 days before the 'start' and after the 'end' dates, then the calc will allow for the 30-day rule over tax years.

If, like me, you calc for each tax year separately, then the bottom box of my prog provides the opening position for the following tax year.

[gbh2] 23/5/2011 09:06

David77, I don't know if it was how I used yours but I found it wouldn't take my complete pool records into account, because they commence in 1999.

[david77] 23/5/2011 08:08

No - mine uses java script and runs on a users' machine. The other one reads the data back to the server to do the calcs and then sends the results back to a users' screen. (a) I don't know how to do that, and (b) he has to pay more for web hosting than I pay.

I think that the results from both are very similar - I have used the other one to check that my results look ok. The other one is better this year 'cos it produces the 3 figs that the taxman wants (gain to 22 June 10, gain 23 June 2011 to 5 April 2011, and loss over the year). With mine, you have to run the prog twice and specify the start and end dates for each period. I am not proposing to change the prog 'cos, with luck, this is a one-off, so my prog should be ok for other tax years.

The other one produces a more compact results page, but I think, they are more difficult to follow. My prog follows the HMRC procedure - see

[lw425] 22/5/2011 22:29

david77. do you own the other one? is it accurate as it looks more user friendly so far. thanks

[goldennugget1] 22/5/2011 21:15

Thanks guys.

[david77] 22/5/2011 20:51

"goldennugget1 - 22 May'11 - 19:38 - 6067 of 6068
....
Also these two calculator sites show wildly different tax results (2k vs 6k) , Any ideas why? is this to do with the income tax? (even though they both asked for the 30k to be entered and was considered in the calculation) ... do you pay 2k or 6k - the latter makes share trading not very appealing."

The calculator on www.stonebanks.co.uk is mine and my prog deliberately deals only with CGT.

[lw425] 22/5/2011 20:09

looking quickly at the right hand side info, the final figure includes income tax you've already paid on your main job/other income. the amount of cgt due is £1782. it's not meant to imply you must pay £6487

[goldennugget1] 22/5/2011 19:38

Hi guys.

When using CGT calculator to work out tax due, it correctly shows that a small amount of CGT is due, but shows that income tax of £4705 is due on a £20k win. (assuming a 30k annual gross income). . I didnt think income tax was due on shares only CGT??? Am i getting confused?

Also these two calculator sites show wildly different tax results (2k vs 6k) , Any ideas why? is this to do with the income tax? (even though they both asked for the 30k to be entered and was considered in the calculation) ... do you pay 2k or 6k - the latter makes share trading not very appealing.

[gengulphus] 18/5/2011 09:06

nightspot,

Your post seems to have been cut off before you finished it, but I think the main things that affect your situation are:

* Private residence relief covers the entire period that you lived in the old residence and the last three years of your ownership. So if you sell within 3 years after you moved out, it will be completely exempt from CGT.

* If you sell later than 3 years after you moved out, there will be a gap that is uncovered by private residence relief. E.g. if you sell 4 years after you moved out (which would be in 2014), then the year from when you moved out to a year later won't be covered. So one year out of 28 years of ownership would be uncovered, which means that 1/28th of the gain would be chargeable to CGT. There is a good chance that that 1/28th of the gain will be completely within your CGT allowance, meaning that no CGT is payable. As more time goes by, the fraction that is chargeable will slowly rise and will eventually be enough to exceed your CGT allowance, so CGT will eventually become payable - exactly when depends on just how big the gain is, though. (By the way, if you're married and you put the house into joint names, that makes both of your CGT allowances available and so delays the point at which CGT becomes payable even more.)

* If you let the old house out, you can also get letting relief on it (because it has been your main residence at some point). That will cover a further chunk of the gain (up to £40,000 worth) and so delay the point at which CGT becomes payable. I would not be at all surprised to find that you could rent the house out and sell after five years or more and still not pay CGT - but again, exactly when CGT becomes payable depends on the exact amount of the gain and other personal circumstances.

See for the taxman's Helpsheet about private residence relief and letting relief.

Gengulphus

[nightspot] 17/5/2011 20:58

I haven't been reading this board so apologise if this question doesn't belong here or has been asked before.

I bought my house in 1986. I bought a BTL three years ago, and spent and overspent extending and improving it. Last year, I moved into the BTL, so that now is my main residence. My previous home has been empty, and I must decide now whether to rent it out or sell it.
I gather that I could rent it and if I sold within 2 years (making it