Capital Gearing Share Discussion Threads

[singh is king] 15/1/2012 11:04

Gengulphus.Thank you for your reply.That is what i thought.
Unfortunately,(i suppose i should say fortunately),some of my CGT gains will be liable to the 28% tax rate.

[gengulphus] 15/1/2012 04:58

But i worry about the stupid 30 day rules and section 104 pooling if i fiddle the buy and sell dates, or remove them completely and amend the results.
...
In actual fact it is a small number of problems, ...

Frankly, I think that's the key to the problem, and the solution that it suggests is simple: in the small number of cases where the calculators won't do the job reasonably easily, do it by hand!

You might want to find a way of adjusting the input to the calculators to make them produce the right results, but making certain that the results are right involves knowing what the right results are. So you end up either trying to persuade yourself that your adjustments will work in general (which is tricky and error-prone), or working the specific case out by hand to check that the adjustment works in that particular case.

If you do the latter, you're doing more work than you would if you just worked it out by hand, since you're also having to work out what adjustments to make to the calculator input and how to present those adjustments in the computations you submit with your return to make it clear to the taxman what you're doing. Remember that those computations are covered by the overall declaration that your tax return is complete and correct to the best of your knowledge and belief. Putting things in them that are contrary to fact, such as incorrect dates for trades, violates that declaration unless you make it clear what the true facts are and how you've adjusted them. And if it isn't pretty obvious that the adjustments will produce the correct results, you want to write down why they will - because in the event of the taxman querying them, you don't want to find yourself scratching your head in many months' time trying to work out why you thought they would produce the right results... That bit of writing could be notes for yourself or could be part of your submitted computations - but I would recommend the latter, because it might avoid the point being queried at all!

Gengulphus

[gengulphus] 15/1/2012 00:41

singh is king,

Am i correct in thinking that all losses claimed in this year can be offset against gains that are liable to the 28% rate of CGT?

Yes - as long as you have enough such gains!

The same goes for use of the CGT allowance - you only have to use it and/or losses against the pre-Budget gains that are only liable to CGT at 18% if you don't have enough post-Budget gains to absorb all of the losses and CGT allowance.

As far as I am aware, by the way, if you provide the pre-Budget gains, the post-Budget gains and the losses for the year on the Capital Gains Summary pages (or their online equivalent), the losses and CGT allowance will automatically be used against the post-Budget gains in preference to the pre-Budget gains, and only used against pre-Budget gains if you run out of post-Budget gains. Certainly that's how the Tax Calculation Summary notes ( ) do it - if you look at its page TCSN 37, you'll see that it offsets the post-Budget gains (box 5 from the Capital Gains Summary pages) against the losses (box 6) and the £10,100 CGT allowance in the top half of the page, and only then moves on to the pre-Budget gains (box 3) in the bottom half of the page. (All cluttered up with a number of other adjustments, I'm afraid, but the 'post-Budget gains, then pre-Budget gains' structure is reasonably easily visible if you just look at the overall structure.)

I.e. you don't have to do anything special to get that treatment - rather, you have to do something special if for some reason you cannot use that treatment, e.g. if you have "clogged" losses that are subject to restrictions about what gains they can be used against (such cases are what box 8 on is about).

Gengulphus

[rangers99] 14/1/2012 19:35

singh is king - 13 Jan'12 - 18:10 - 6418 of 6424

david.I also am using CGTcalculator for the second year.When working out this years CGT figure i have simply pasted into the calculator all my trades for 2009/10 and 2010/11 and then used the calculator to separate the trades by tax year.
Will this produce inaccurate results?

No it will produce the right result. Just keep all your trades in the same file .
,adding new ones when you make them.. The calculator will work out and display the gain/loss for all the tax years.

[david77] 14/1/2012 19:27

I would be inclined to make the dummy opening buy on the same day as you take out the real short. They will match as same day deals and should show zero gain or loss.
Then you do your dummy sell (at the original deal price) on the day you close your real buy so that the profit or loss appears on that day.

[ukinvestor220] 14/1/2012 18:15

yes CR that could work, or i could remove them from the calcs and amend the final results manually.

But i worry about the stupid 30 day rules and section 104 pooling if i fiddle the buy and sell dates, or remove them completely and amend the results.
david77 would your method still balance the pooling? - would i use the dates one day before the short and one day after the corresponding covering buy?

In actual fact it is a small number of problems, and as long as none of the stocks involved dont span the tax year as far as 104 pooling is concerned then it wont make any difference ..... will it !?

Its a messy way to sort it out though and i prefer a simple automated process that will work year to year!!

[david77] 14/1/2012 16:55

The stonebanks calculator won't handle shorts.

Perhaps do a dummy buy before your short at the same price that you are selling. That will show zero gain or loss. When you close your short, follow it with a dummy sell at your original buy price. That should show your gain or loss on the deal.

[ukinvestor220] 14/1/2012 14:51

Hello
Thanks for you excellent help via this thread, I have learnt alot from it.

I have used the Sharescope CGT calc before, but uncovered errors in it and have used the CGT Calc to test my data.

The issue relates to shorting - if the short is within 30 days it gets captured by both the calcs (Using CFD's).

But if it is over 30 days it throws up error in CGT calc that i have sold too many shares in xxx without prev buying them, check data / dates etc. (Sharescope simply doesnt calculate it!!)

I have identified the shares that cause the problem.

Is there a CGT calculator which will include short trades over 30 days ? If not what is the best way to 'add' them to the output?

Many thanks :)

[david77] 14/1/2012 12:02

It should be ok but it's not my prog.

[singh is king] 13/1/2012 18:10

david.I also am using CGTcalculator for the second year.When working out this years CGT figure i have simply pasted into the calculator all my trades for 2009/10 and 2010/11 and then used the calculator to separate the trades by tax year.
Will this produce inaccurate results?
I have checked quite a few of the calculations manually and they seem to correct.
Would appreciate your comments.

[singh is king] 13/1/2012 17:51

Gengulphus,many thanks for replying to my query.
My gains for the 2010/11 year are higher than the loss realised at JRVS,so will use it to reduce the CGT for 2010/11.
Am i correct in thinking that all losses claimed in this year can be offset against gains that are liable to the 28% rate of CGT?

[miata] 13/1/2012 13:51

Now, now, doing it right is not perfectionism. (Checking/challenges are unlikely unless your gains or losses exceed £50,000)

[david77] 13/1/2012 13:29

If you had used the www.stonebanks.co.uk calculator then at the end of the last tax year you could have copied the content of the bottom text box and used that to start a text file for the following year. It lists companies with date of the last deal, b, pool quantity, pool cost, total cost where "pool" means your closing shareholdings and the "b" shows the CGT prog that you have bought the shares.

Perfectionists will want to cope with the 30-day rule (buy within 30 days of an earlier sell) over the year end - but I'm not a perfectionist and haven't been challenged yet!

[aingers008] 13/1/2012 12:57

This is my second year of submitting a tax return for CGT. I used CGTcalculator.com last year and ended up with a pooled figure for several shares. My question is how do I enter those figures into the calculator this year. Do I show them as a purchase at the pooled price at the beginning of the tax year, or do I have to go back and show the original purchase dates and prices, less any that were sold during the previous period.

Thanks for any help you can give me.

[miata] 13/1/2012 10:28

Thats a wide range!

Yes.

For gains on or after 23 June 2010, individuals need to work out their total taxable income before working out which Capital Gains Tax rate to use.
First work out your taxable income by deducting any tax-free allowances and reliefs that you are entitled to.
Next see how much of your basic rate band is already being used against your taxable income. The basic rate band for 2010-11 is £37,400.
Allocate any remaining basic rate band first against gains that qualify for Entrepreneurs' Relief - these are charged at 10 per cent.
Next allocate any remaining basic rate band against your other gains, these are charged at 18 per cent.
Any remaining gains above the basic rate band are charged at 28 per cent.

[churchill2] 13/1/2012 10:09

Thanks gentlemen for your prompt reply.

One further question. The gain is in the £100-200,000 range so is 28% the top rate after £37400.

[miata] 13/1/2012 07:01

the large capital gain you made is split 50:50 between you and your wife - no choice about how it is split, I'm afraid.

For the future, you can, if you so wish, declare your interest in specific holdings is split in another ratio (eg 60:40). Later your interests may change and you can then make a fresh declaration to reflect the new split. (IN151 refers)

Penalties for FILING late
One day late - £100, Up to three months late - £10 per day (max £900)
Up to six months late - additional £300 or 5% of tax due whichever is GREATER
Up to twelve months late - a further additional £300 or 5% of tax due whichever is GREATER, possibility of higher penalty of 100% of the tax due.


Ensure you have the information this form asks for to hand before you phone HMRC.



Self Assessment Helpline 0845 900 0444.

[gengulphus] 13/1/2012 05:36

churchill2,

Your tax return is for your tax affairs only. Don't try to use it for your wife's tax affairs - the system won't cope well with such an attempt! At best, someone will notice what you've done and tell you "No, you cannot do that - try again"; at worst, it doesn't get noticed and sits around in the system as a time-bomb that can get you into trouble later...

Since the shares were in joint names, the large capital gain you made is split 50:50 between you and your wife - no choice about how it is split, I'm afraid.

You are each entitled to your own CGT allowance of £10,100 for the 2010/2011 tax year. Combined with the 50:50 split of the gain, that means that the first £20,200 of the gain is free of CGT - but the way to present that to the taxman is that each of you has a gain of £10,100 that fits within your own personal allowance.

As each of you has income within your personal allowance, you each have a completely unused basic-rate band of £37,400 for the 2010/2011 tax year, which means that the next £37,400 of each of your halves of the gain are taxed at 18%. Anything above that is taxed at 28%.

Any unused personal allowance you have does not increase the amount taxable at 18% - the personal allowance is for Income Tax only, just as the CGT allowance is for CGT only.

If the total gain is above £20,200 (which I would guess from your questions it is), then your wife has CGT to pay for the 2010/2011 tax year. Anyone who is not sent a tax return to complete is supposed to check whether they have any Income Tax to pay in excess of what has been deducted at source, or any CGT to pay, and if either (or both) of those is the case, to notify the taxman of that fact by six months after the end of the tax year concerned - which means by 5 October 2011 in the case of the 2010/2011 tax year.

So I'm afraid that if the total gain is over £20,200 and the taxman has not been informed that your wife owes CGT for the 2010/2011 tax year, the bad news is that she is already in the wrong and liable to a penalty, at least in principle. In practice, I think (but do not know - this is based on stories I've read, not first-hand knowledge) that the penalty will be minimal or maybe even just a "don't do it again!" slap on the wrist provided she comes forward promptly and settles things quickly. So I would strongly suggest that she gets on to the phone asap to the taxman and says she has discovered that she owes CGT for the 2010/2011 tax year and is supposed to have informed him of that fact, and asks how she should best deal with the situation. He may well say to submit a tax return, but in the specific circumstances of income within her personal allowance and the capital gain being (presumably) a one-off one that is unlikely to be repeated in any other year, it seems conceivable to me that something simpler and easier will be sufficient. (And as the taxman's response may well depend on the circumstances, she should have at least approximate details handy when she phones - size of the gain, how much CGT is owing, etc. And I should add that when I say "she phones", that's because I don't think HMRC will talk about it in a phone call coming from you alone - not unless they've got authorisation from her for you to act as her agent. But if you're going to be more familiar with the details, it may well be acceptable for her to phone, identify herself suitably and then ask them to talk to you about the matter.)

Do it by phone, not letter. That's because letters sent to HMRC are liable to get into a backlog that is left unread for weeks (last time I had to send them a letter, which was a bit under two years ago, they took about 9 weeks to get around to dealing with it!), and there are good reasons to want to get this settled by January 31st.

Finally, for completeness, I'll deal with two cases that sound unlikely but aren't completely ruled out by what you say:

* If the total gain is £20,200 or less, your wife does not owe CGT on her half of it and does not need to do anything.

* If the total gain is more than £20,200 and your wife has informed the taxman that she owes CGT, I'd expect him to have sent her a tax return to complete, or possibly some simpler form. If he hasn't, and also hasn't said she's not expected to do anything, a phone call to chase up the matter would seem a good idea.

Gengulphus

[gengulphus] 13/1/2012 04:29

singh is king,

HMRC have now placed JRVS on their negligible value list with an effective date of 26/03/10.
My question is can i still include this loss in my 2010/11 tax return,bearing in mind that it needs to be submitted in less than 3 weeks?To date i have not written to HMRC informing them of the loss.Do I have to inform them in writing and wait for a positive reply, or can i just make the claim on my return? and if so how do i do this?(Is it possible to show a sale of the shares at zero value?)

As far as I am aware (I've not done this myself in an online return), you just make the claim in your return. You can submit your computations in whatever format you like, so there cannot be a fully-effective automatic check that sales aren't given at zero value, and a manual check (if it happens at all) is not going to give the taxman any real grounds for complaint as long as you've been clear what you're doing. (If there is an automatic check at all for zero value sales in some particular method of submitting your computations, you'll just have to use another, possibly more cumbersome method for that sale.)

So basically, I would include a statement along the lines of "I claim that my holding of N shares in Jarvis plc had become of negligible value by 06/04/2010." in my computations of the loss on those shares, citing the negligible value list as evidence that they had become of negligible value by that date. The date of 06/04/2010 isn't critical - it just needs to be a date in the 2010/2011 tax year if you want to avoid complications about whether the loss is usable in the 2010/2011 tax year. (I cannot think offhand of any reason why it would matter which date you used in the 2010/2011 tax year. Which doesn't mean that there couldn't be such a reason - tax law is complex enough that there probably are some obscure circumstances in which it matters! - but does mean that there would have to be something fairly unusual about the exact circumstances for the precise date to matter.)

In particular, don't give the date as 26/03/2010, which is in the 2009/2010 tax year, since that would mean that the loss first needs to be used against gains in the 2009/2010 tax year, then any remaining loss gets carried forward into the 2010/2011 tax year. (You can achieve that result if it's what you want - but the way to do it is to amend your 2009/2010 tax return to include the negligible value claim, the computation of the resulting loss, the offsetting of that loss against 2009/2010 gains and the carrying forward of the remaining loss into 2010/2011, and to submit your 2010/2011 tax return with that remaining loss brought forward from 2009/2010 rather than freshly claimed.)

The other thing I would do is make certain the claim is easily found by someone reading the return by including something along the lines of "My computations for Jarvis plc include a negligible value claim" in the "any other information" area (box 36 in or its online equivalent).

Gengulphus

[churchill2] 12/1/2012 23:30

Gengulphus

Can you help please.

I am a Pensioner who bought shares at a low cost. In October 2010 an unwelcome takeover for cash resulted in large capital gain.

Fortunately shares registered in joint names. When I complete my self assessment in the cgt section do I include my wife's details whose sole income is her state pension. Or alternatively does she need to complete a tax return.

My income is from a private and state pension which does not exceed my personal allowance for people aged over 65.

Our combined exemption is £20200. The important question is my wife eligible for her personal allowance and are we both entitled to the £37400 band at 28%.

Thanks in anticipation.

[nomunnofun] 12/1/2012 17:32

1) Yes

2) No - other than the general rule about record keeping under Self Assessment.

[seible] 12/1/2012 17:11

Just a couple of questions, if I may:-

1. I bought and sold the shares of one company through my ISA account. Now I have repurchased (inside 30 days) the shares in the same company but through my trading account. Am I correct in assuming that the 30-day rule is not applicable to my repurchase?

2. Do I need to provide the HMRC any information about my ISA account or transactions I made within this account at all?

Thanks a lot for your help, really appreciate it!

[the oak tree] 11/1/2012 21:11

Thanks David and Miata. I won't though be uncovered. So there shouldn't be any extra risk, just no CGT tax to pay!