Capital Gearing Share Discussion Threads

[miata] 16/8/2011 11:37

If your highest rate is zero (which it would be if you have unused allowances).

[ndogg] 16/8/2011 11:19

Re. this dividend from POL. What if you don't pay an Income Tax at all and you still have your full unused Personal Allowance. Would you receive the gross amount and not have to pay any tax on it provided it's under £7.5k?

[miata] 16/8/2011 10:09

It seems that those on the thread again say there will be no uk tax to pay

As the dividend has been said to be paid gross without a tax credit there would appear no basis for their optimism. There is no DTA with the BVI.

Expect to pay UK tax at your highest rate or justify with reasons.

[royaloak] 16/8/2011 08:53

Gengulphus

Some advice on foreign dividend tax please.

I have dividends from last year with HOIL. On my end of year consolodated tax forms from my broker there is no tax credit shown, they are registered in Jersey.

My assumption is that I will have to pay the 10% tax credit on them.

However on various boards I have seen that if the country concerned as a double taxation agreement with the UK there will be no tax to pay.

POL which is registered in the BVI is paying a special dividend, again without a tax credit. It seems that those on the thread again say there will be no uk tax to pay, I would appreciate your understanding on the matter.

Again, many thanks in anticipation.

[praipus] 08/8/2011 20:25

PEQ in the portfolio?

[gengulphus] 07/8/2011 22:05

Can someone please explain to me the 30-day rule by using the example below:

1 Jul 2010 - I bought 1,000 shares for £1,000 in an imaginary company X.
1 Oct 2010 - I sold 1,000 shares in X for £1,500.
15 Oct 2010 - I bought 1,200 shares in X for £1,200.
15 Dec 2010 - I sold 1,200 shares in X for £1,700.

To understand what's going on rather than just get the figures calculated for you: once the same-day rules have been dealt with (dead easy in your example - you have no same-day trades!), and provided all trades are on or after 6 April 2008 (also no problem in your example), the rules say you have to go through the trades in date order:

* Each as-yet-unmatched purchase gets added to a "pool" of shares (called the "section 104 pool" in taxmanspeak).

* Each sale gets matched to as-yet-unmatched purchases in the next 30 days, choosing the earliest one first if there is more than one. If that's not possible, it gets matched to the "pool" and the relevant shares are removed from the "pool".

So:

* For the purchase on July 1st, your "pool" of X shares grows from 0 shares bought for £0 to 1000 shares bought for £1000.

* The sale of 1000 shares on October 1st gets matched to 1000 of the shares bought on October 15th, since that purchase is within the next 30 days. You realise a gain of the amount you sold them for (£1500) minus the amount you bought them for (1000/1200ths of £1200), which comes to £500.

* For the purchase on October 15th, 1000 of the shares have already been matched. The remaining 200 shares get added to the "pool", bought for 200/1200ths of £1200, which raises the "pool" to 1200 shares bought for £1200.

* For the sale on December 15th, there are no purchases in the following 30 days, so it gets matched to the "pool". You realise a gain of the amount you sold them for (£1700) minus the amount you bought them for (1200/1200ths of the £1200 cost of the "pool"), which comes to another £500. The "pool" is reduced back to £0 shares bought for £0.

In situations like this where the "pool" starts and ends at 0 shares bought for £0, you can double-check the computation by seeing whether the gains and losses calculated match up with your overall gain. In this case, you've calculated two gains of £500, a total of £1000, and your overall gain is the amount you got from the sales (£1500+£1700 = £3200) minus the amount you spent on the purchases (£1000+£1200 = £2200), which also comes to £1000. I.e. the double-check succeeds.

The calculator output also has that double-check, though it comes up with £3204-£2204 rather than £3200-£2200. That's due to the input for the last trade giving a share price of 142p, when £1700/1200 is actually a third of a penny less than 142p.

Gengulphus

[seible] 07/8/2011 09:17

Can someone please explain to me the 30-day rule by using the example below:

1 Jul 2010 - I bought 1,000 shares for £1,000 in an imaginary company X.
1 Oct 2010 - I sold 1,000 shares in X for £1,500.
15 Oct 2010 - I bought 1,200 shares in X for £1,200.
15 Dec 2010 - I sold 1,200 shares in X for £1,700.

How shall my gain be calculated in the above example? Many thanks in advance!

[gengulphus] 02/8/2011 22:13

nomunnofun: you might well be right, but I really don't see any way of knowing for certain without the poster saying what their contract note actually looks like. And I prefer to say "I don't know for certain - this is what you need to tell me" than to treat a guess about what the poster did as fact...

MIATA: Agreed - sort of! It's the quick way to get the right answer, and it ought to satisfy the taxman in simple cases. But knowing that the calculation is officially (disposal proceeds) minus (all allowable costs) is useful for more complex cases, or if the taxpayer wants to use the working sheet in the notes on the Capital Gains Summary supplementary pages.

Gengulphus

[miata] 02/8/2011 09:23

I think that the reason for the confusion is much simpler - the poster should have only used the totals.

[nomunnofun] 02/8/2011 09:17

Gengulphus - I think that the reason for the confusion is much simpler and it centres on the contract notes themselves. The poster just used the bottom figures and applied dealing costs in the same manner for both sales and purchases. On the purchase note the total at the bottom includes the costs of the purchase which has been added to the share costs whereas, on a sale note, the costs of sale are deducted from the sale proceeds before arriving at the 'grand total', all which, of course, you know. I just think that the poster omitted this from his calculation.

[nomunnofun] 02/8/2011 07:44

One return each - no other option - with half the proceeds, costs etc declared on each return.

Basic rate band cannot be combined as you suggest. The days of joint taxation left us in 1990, I am afraid.

[gengulphus] 01/8/2011 20:21

SoundBuy,

The correct way to present it from the taxman's point of view is (disposal proceeds) minus (all costs). Disposal proceeds are normally the 'raw' amount you sell the shares for, i.e. number of shares sold times the price per share. Costs are normally:

A) The 'raw' amount you bought the shares for, i.e. the number of shares bought times the price per share.

B) Incidental costs of acquisition, which are normally broker commission, stamp duty, and for trades over £10k, PTM levy.

C) Incidental costs of disposal, which are normally broker commission.

The final figure on your purchase contract note is costs A) plus costs B). It is fairly clear from what you've said that in your company X example, costs A) are £2278.65, costs B) are £9.95+£11.39 = £21.34, and so the final figure on your purchase contract note is £2299.99.

The final figure on your sale contract note is the disposal proceeds minus costs C). Unfortunately, it's not clear from what you wrote whether you mean that:

* The disposal proceeds are £3692.79 and costs C) are £9.95, so that the final figure on your sale contract note is £3682.84; or that:

* The disposal proceeds are £3682.84 and costs C) are £9.95, so that the final figure on your sale contract note is £3672.89, and the figure of £3692.79 that you quote is just the result of you adding the figures when you should have subtracted them.

You're getting confusion because people are making not-necessarily-correct assumptions which of those two you mean. Only you can resolve that by saying which of those two correctly describes your sale contract note.

Another way of calculating the gain is just the final figure of the sale contract note minus the final figure of the purchase contract note, since that's just another way of subtracting all of costs A), B) and C) from the disposal proceeds. So in the first case above, the gain is £3682.84-£2299.99 = £1382.85, and in the second, it is £3672.89-£2299.99 = £1372.90. In both cases, the subtraction of the selling costs that you're worried about has already been done on the sale contract note; if you want to present that subtraction to the taxman (and it would probably be a good idea to avoid confusing him the way you've confused people here!), copy that subtraction over to your computations.

Gengulphus

[nomunnofun] 01/8/2011 10:33

SoundBuy - NO!

The figure of £3682.84 IS after selling costs. The proceeds of the shares is £3692.79. The selling costs are £9.95. You seem to be wanting to deduct the selling costs from the net revenue which is after selling costs!

[soundbuy] 01/8/2011 10:28

So simply put

Net revenue from sale minus net Net purchase cost minus all costs (stamp duty plus buy/sell fees)

[soundbuy] 01/8/2011 10:22

nomunnofun - Thanks once again but I figured you're calcualtion went as thus:

Net sell: £3682.84

Net purchase price £2278.65

£3682.84 - £2278.95 = £1403.89 profit

Total Purchase Costs: £11.39 + £9.95 = £21.34

£1403.89 - £21.34 = £1382.85

This is the figure you arrived at without deducting the selling costs.

Edit: Then I would deduct the selling costs so

£1382.85 - £9.95 = £1372.90

[david77] 01/8/2011 10:21

nomun and MIATA are right - I got them all wrong - now corrected, I think - which is why I wrote a prog to do it for me!

[miata] 01/8/2011 10:13

nomunnofun you are right - someone has lost the plot.

Shares sold Total £3692.79
Comprising
Shares £3682.84
Fees £9.95

How can you ADD fees to proceeds. Fees are a charge from proceeds.

KISS Cash received - Cash paid = Profit.

[nomunnofun] 01/8/2011 10:09

David77 - you have not deducted costs of sale?

[david77] 01/8/2011 10:07

X: Profit = Shares sold Total less costs £3672.89 - Total Cost £2299.99= 1372.29

Y: Profit = shares sold Total less costs £64,558.55 - Total Cost £64,069.65 = 488.90

Z: Profit = Shares sold Total less costs £1031.30 - Total Cost £1999.45= - 968.15

I'm not qualified to give advice but I expect another or two to be along soon.

[nomunnofun] 01/8/2011 10:07

SoundBuy - one of us is losing the plot! I did deduct the selling costs in my previous answer e.g.

Company X - proceeds £3692.79 less costs £9.95 = net proceeds £3682.74

Costs of purchase: £2299.99

Gain : £1382.75.

Standing by my original answer.

[soundbuy] 01/8/2011 09:37

Me again

Had some help before just to confirm I'm correctly working out CGT and gave 3 examples. Had some kind help but wouldn't it be necessary to deduct the selling costs. TIA for any help.
----------------------------------------------------------------------------
eg.Company X

Share Purchase Total Cost £2299.99

Comprising

Shares £2278.65
Fees £9.95
Stamp Duty £11.39

Shares sold Total £3692.79

Comprising

Shares £3682.84
Fees £9.95

TOTAL PROFIT for CGT Calcualtions £1382.85 or £1372.55?


---------------------------------------------------
Company Y

Share Purchase Total Cost £64,069.65

Comprising

Shares £63,740.00
Fees £9.95
Stamp Duty £318.70
Levy £1.00

Shares sold Total £64,569.50

Shares £64,558.55
Fees £9.95


TOTAL PROFIT for CGT Calcualtions £488.90 or £478.95?

-----------------------------------------------------
Company Z

Share Purchase Total Cost £1999.45

Comprising

Shares £1979.60
Fees £9.95
Stamp Duty £9.90


Shares sold Total £1041.25

Comprising

Shares £1031.30
Fees £9.95


TOTAL LOSS for CGT Calcualtions £968.15 or £978.10?


Once again, thanks for any help.

SB