Capital Gearing Share Discussion Threads

[radhaz] 02/2/2012 10:29

HMRC website has not acknowledged that I have paid yet. It still shows this when I log in, even though the money was taken from my bank account last week. Should I be concerned?


"You have a total of £xxxx becoming due for payment. Your next payment is due on 31 Jan 2012. For details of the amount and the date of payment please select the figure of tax becoming due."

[tehmac] 02/2/2012 08:20

MIATA: Thanks very much. Say I used the monthly averages and assigned that exchange rate for each transaction at the end of each month. What about the additional profit/loss I may incur when changing back all my USD in my account to GBP for withdrawal? I may have changed my entire account balance to USD at 1.53 exchange rate, then be changing it back at 1.63, incurring a significant loss. Does this get logged in some way?

[singh is king] 01/2/2012 21:21

Just a quick one if anyone is around.
Just submitted my return on line in which i claimed a loss on JRVS which went on the HMRC negligible list on 26/03/10.
Made a note in the additional info. page that i was doing this.
Not sure whether i should have answered yes to the "are you making any claims or elections" question?
As it was already on the neg. value list didn`t think it was necessary.
Would appreciate any expert views,so if necessary i can make an amendment tomorrow.
Many thanks.

[miata] 01/2/2012 20:24

There are several ways you can approach this, it is not essential that you use the exact exchange rate for each transaction. I would suggest you run a dollar account (as it is easier to think in dollars for US shares) and calculate sterling equivalents of purchases, sales and cash transfers using monthly exchange rates.



You can use London closing rates when translating foreign currency amounts into sterling. Equally you can use other exchange rates, such as an exchange rate quoted by your bank, or the monthly average rates published by HMRC for VAT purposes.

[tehmac] 01/2/2012 19:15

I use the CGTCalculator website for my CGT data. I am in the UK and trade in GBP. This has been fine until now I am using TDWaterhouse/TDDirectInvesting as my broker, and I have begun to trade stocks on the NASDAQ exchange. This is normally fine because when I buy or sell a stock, TDW automatically do a currency conversion on my buy or sell cost, and I can see in the transaction history exactly what it equated to in GBP for my records.

However, I am being stung by the change in foreign exchange rate from day to day, and it's eating into my profits or making losses worse. I do have the option however to change my entire account balance into USD instead of GBP, which means I could trade at the same level all the time and convert it back later at a time of my choosing. However, it means my transaction history will all be in USD rather than GBP.

This means I won't be able to record in GBP for the tax man each individual trade in GBP. When I finally convert it all back to GBP at some point then I could lose or gain x amount on the conversion. How would this then be recorded for CGT?

Any thoughts on how I deal with this issue? Best to just stick with daily conversions and keep it all in GBP?

[david77] 01/2/2012 11:22

Someone has used my CGT calc prog but now wants to convert the output to pdf format for submission to the taxman.

So, can someone please suggest an online text to pdf converter?

[gengulphus] 31/1/2012 11:19

In case anyone else wants to know the answer to red nutter's question, or is thinking of answering it, I've answered it on the other thread:



Gengulphus

[singh is king] 30/1/2012 14:19

Gengulphus many thanks for answering my questions.
I am really grateful to you and other posters such as MIATA and david.You all provide excellent knowledge on the complex matter of CGT on shares and all for free!

[gengulphus] 30/1/2012 14:09

singh is king,

Made the mistake of not taking up my rights in the FPM rights issue in May 2010.
As a result i received compensation for the rights not taken up.
My question is,where do you account for this money on your tax return?

It's treated as a capital distribution by the company. There are two possible CGT treatments for it - if both are available, you choose which you want to use:

* Apportionment: apportion the base cost of the original holding between the new holdings of rights and ex-rights shares, according to the market values of the new holdings at the close of business on the ex-rights day (i.e. the end of the first business day after the original shares were split into rights and ex-righhts shares). Then calculate the gain or loss realised on the rights as the lapsed rights payment minus their portion of the original base cost, and set the base cost of the shareholding going forward to the other portion of the original base cost.

* "Small" capital distribution: No gain or loss is realised immediately, but you subtract the amount of the lapsed rights payment from the base cost of the shareholding. (So when you eventually sell, your gain is that much more or your loss that much less - i.e. it basically defers dealing with CGT on the lapsed rights payment until the later sale.)

The apportionment treatment is always available. The "small" capital distribution treatment will normally be available if the amount of the lapsed rights payment is less than £3,000, or if it is over £3,000 but less than 5% of the value of the holding, or if you can convince the taxman that it should be treated as "small" for some other reason.

Exception: You cannot use the "small" capital distribution treatment to reduce the base cost below zero. So if the base cost of the holding is zero (which could happen if e.g. there had been a lot of previous "small" capital distributions by the company), you have to use the apportionment treatment. If the base cost is positive but less than the amount of the lapsed rights payment, you can use the "small" capital distribution treatment partially: use part of the lapsed rights payment to reduce the base cost to zero, then process the rest of the lapsed rights payment under the apportionment treatment.

Comments on which to use:

* I would normally expect both treatments to be available for lapsed rights payments, at least for investors who are less than fairly seriously wealthy, because the payment is unlikely to be above £3,000.

* The apportionment treatment is generally a bit of a pain, due to the need to get the market values of the two new holdings on ex-rights day. (Except in the case of the base cost being zero, which is easy because £0.00 divided up in any proportions whatsoever produces £0.00 and £0.00.)

* The apportionment treatment might produce a gain or loss that you would find useful in order to use more of your CGT allowance (for a gain) or reduce your CGT (for a loss). If it's a big enough gain or loss for the extra effort to be worthwhile, it may be worth opting for the apportionment treatment.

* But otherwise, the "small" capital distribution treatment is better: less data required, simpler calculations, no actual gain or loss to report at the time.

On a related area, if during a rights issue, you sell your rights on the market, the sales proceeds are also treated as a capital distribution and so have the same choices available as for a lapsed rights payment.

Gengulphus

[gengulphus] 30/1/2012 13:27

singh is king,

1)Transferred 10K shares to my wife, in company x at a pool cost of 34.0951p on 02/02/11.
2)For some reason i repurchased 5K shares in company x on 15/02/11,(ie within 30 day`s of the transfer), at a price of 171.72p.
3)My wife sold 8800 of the transferred shares on 25/03/11,(ie more than 30 day`s after the transfer).
Because i repurchased 5K within 30 day`s of the transfer,should the average price used for the transfer not go up?
Both the calculators show the average purchase price for the transfer on 02/02/11 remaining the same,despite the repurchase.
Both the calculators match the 5K buy on the 15/02/11 with an earlier sale on 17/01/11 for 10K shares-presumably because of the 30 day matching rules.
Does this sound correct and is this why the average cost price for the transfer on 02/02/11 has not been altered by the later buy on 15/02/11?

Yes, it's correct.

The relevant facts about your transactions are that:

* You disposed of 10k shares on 17/01/11.

* You disposed of 10k shares on 02/02/11.

* You acquired 5k shares on 15/02/11.

With regard to the order in which disposals are processed, the share matching rules say that:

* First, you process the same-day rules for all the disposals - doesn't matter which order, because transactions on different days don't interact with each other at all under the same-day rules.

* Then you go through the remaining disposals (i.e. disposals that the same-day rules didn't apply to, or the remaining portions of disposals that were partially matched by the same-day rules) in date order, completely matching each one before moving on to the next.

In your case, the same-day rules aren't relevant, and then the second stage matches the 17/01/11 disposal first, to the 15/02/11 acquisition and 5k shares from the Section 104 pool. So by the time it gets to matching the 02/02/11 disposal, the 15/02/11 acquisition is no longer available for matching.

The fact that the 02/02/11 disposal was a transfer to your wife doesn't affect how the disposals and acquisitions are matched up to each other - it just says that you must treat that disposal as occurring at the price that will lead to you realising no overall gain or loss on it.

Gengulphus

[gengulphus] 30/1/2012 12:59

red nutter,

Hope someone can help - I have £13k gains for shares for tax year 2010-11 and have £6k of losses from previous year.
I also want to negigible value claim for WLW shares (is on the list -effective date 26/2/09) of £5k.

Where do I do this on the online form?

I would give the claim as part of my CGT computations, and use some appropriate "Additional information" area for a brief comment along the lines of "The CGT computations contain a negligible value claim for Woolworths shares."

Which loss do I use first - my prior tax year loss? or the WLW one?

Depends what date you give in your negligible value claim as the date by which your shares had become of negligible value. It doesn't have to be 26/2/2009 - that's just the earliest it can be if you want to be certain that HMRC will accept the claim.

Indeed, it cannot be 26/2/2009. The rules about making a negligible value claim say that you can give a date in the tax year in which you make the claim (which for a claim made now would be the 2011/2012 tax year) or either of the two preceding tax years (i.e. 2010/2011 and 2009/2010). Since 26/2/2009 is in the 2008/2009 tax year, it's no longer a legitimate date to give in the negligible value claim: it just tells you that all of the dates that are legitimate will result in the claim being accepted, since they are all after 26/2/2009.

Once you've made the claim, you are treated as realising the loss on the date named in the claim. So:

* If the date you give in your claim is in the 2009/2010 tax year, you have to check whether it has to be used against gains in that tax year (see below for more on that). However much of the loss is left after that, if anything, joins the existing losses carried forward into the 2010/2011 tax year and is basically treated entirely interchangeably with them.

* If the date you give in your claim is in the 2010/2011 tax year, it's a same-year loss as far as your 2010/2011 tax return is concerned, not a brought-forward loss. The rule is that same-year losses have to be used before brought-forward losses, so you have to use it in preference to the brought-forward loss.

* If the date you give in your claim is in the 2011/2012 tax year, the loss is totally irrelevant as far as your 2010/2011 tax return is concerned: it only becomes relevant for your 2011/2012 tax return. And because it isn't relevant to the 2010/2011 tax return, I wouldn't confuse matters by including it in that tax return: I would either write separately to the taxman about it, or wait until I was preparing my 2011/2012 tax return and include it in that.

I am presuming that I can carry forward the remaining losses to next year:

No and yes:

For same-year losses, you have to use them against gains as far as possible, right down to zero gains left. You can only carry forward any losses that remain after that - i.e. basically same-year losses can only start being carried forward if you had more losses realised in the year than gains.

For brought-forward losses, it works as you are presuming: you offset losses against gains until either you've used up all the losses or you've reduced the gains to the CGT allowance, and then any remaining brought-forward losses get carried forward again. (Or if the gains are already below the CGT allowance, all the brought-forward losses are carried forward again.)

£13k gain -(£2.9)k loss to bring down to £10,100 limit

£6k(prior yr) + £5k (WLW) = £11k-£2.9k used = £8.1k losses to use in 2011-12.

Where am I using the £2.9k loss to offset from?

I don't really follow what you're trying to do there, but let me give some worked examples:

Example A: You make the negligible value claim for a date in the 2010/2011 tax year. So in that tax year, you have £13k of gains, £5k of same-year losses and £6k of brought-forward losses.

Deal with the same-year losses: they all have to be offset against the gains, and you're left with £8k of gains and no same-year losses.

Then deal with the brought-forward losses: the gains are already below the CGT allowance, so none of them get used and you carry all £6k of the brought-forward losses forward again, into 2011/2012.

Net result: gains within the CGT allowance, so no CGT to pay, and for your 2011/2012 tax return, you'll have £6k of brought-forward losses.

Example B: You make the negligible value claim for a date in the 2009/2010 tax year. It matters at this point how you got to the position of having £6k of losses to carry forward from that tax year.

One possibility is that for 2009/2010, you had say £4k of gains, £10k of same-year losses and no losses brought forward from 2008/2009. The same-year losses get offset against the gains to wipe them out entirely, and that still leaves £10k-£4k = £6k of losses, which get carried forward into 2010/2011.

The extra £5k of 2009/2010 losses created by the negligible value claim changes that 2009/2010 situation to having £4k of gains and £15k of same-year losses. The same-year losses still get offset against the gains to wipe them out entirely, and there are now £15k-£4k = £11k of losses to be carried forward into 2010/2011.

So the 2010/2011 situation in this example is £13k of gains, no same-year losses, £11k of brought-forward losses.

Dealing with the same-year losses is trivial: there are none. Then dealing with the brought-forward losses requires you to use £2.9k of them to reduce the gains of £13k to the CGT allowance of £10.1k, and the remaining £8.1k of brought-forward losses get carried forward again, into 2011/2012.

Net result: gains within the CGT allowance, so no CGT to pay, and for your 2011/2012 tax return, you'll have £8.1k of brought-forward losses.

Example C: You make the negligible value claim for a date in the 2009/2010 tax year, as in example B. But your £6k of brought-forward losses from 2009/2010 arose in a different way: in 2009/2010, you had £12k of gains, £4k of same-year losses and £6k of losses brought forward from 2008/2009. The entire £4k of same-year losses would reduce the gains to £8k, below the CGT allowance, and so all of the brought-forward losses would be carried forward again into 2010/2011.

The extra £5k of 2009/2010 losses created by the negligible value claim changes that 2009/2010 situation to having £12k of gains, £9k of same-year losses, and £6k of losses brought forward from 2008/2009. The same-year losses still get used up entirely, now reducing the 2009/2010 gains to £3k. So there is no change to the amount of losses carried forward into 2010/2011: it's still just the £6k brought-forward losses from 2008/2009 being carried forward again.

So the 2010/2011 situation in this example is £13k of gains, no same-year losses, £6k of brought-forward losses.

Dealing with the same-year losses is trivial: there are none. Then dealing with the brought-forward losses requires you to use £2.9k of them to reduce the gains of £13k to the CGT allowance of £10.1k, and the remaining £3.1k of brought-forward losses get carried forward again, into 2011/2012.

Net result: gains within the CGT allowance, so no CGT to pay, and for your 2011/2012 tax return, you'll have £3.1k of brought-forward losses.

Overall, all three examples mean no CGT to pay, and I'm fairly certain that remains the case for any other reasonably normal example. But the amounts of the losses carried forward into 2011/2012 vary considerably...

You'll need to work out, in the light of your own CGT position in all three of the 2009/2010, 2010/2011 and 2011/2012 tax years, which of them is the best one for you to make your negligible value claim for. Or indeed, if neither 2009/2010 nor 2010/2011 works out very well for you, whether it's best not to make it and instead revisit the question later, when you know your 2011/2012 position better, 2012/2013 becomes a possibility, etc.

For as long as the company remains in existence (and the law on such matters doesn't change), you can keep deferring when you make the negligible value claim, and you'll have the choice of which of three tax years the loss is treated as being realised in - the current tax year and the two preceding ones. Note though that if the company is dissolved while you're still deferring making the claim, you can no longer make a negligible value claim and the loss is realised then and there, with no choice about which tax year it is realised in.

Gengulphus

[miata] 30/1/2012 12:39

The aggregate.

[afryer] 30/1/2012 12:34

Hi, am wondering if you can help.

in the cgt section of the tax return it asks whether you disposed of assets worth 40400 or more.

Does that figure mean any one asset worth more than 40400 or an aggregate of all your transactions added together.

Thanks in advance.

[david77] 30/1/2012 12:22

If you haven't got Word, then Google "txt to pdf" and you'll get several free on-line converters to do it for you

[singh is king] 30/1/2012 11:57

Thanks again david.
someuwin.Thanks,yes i will have to put it into a PDF document as there are quite a few trades to report.

[someuwin] 30/1/2012 11:12

...Or, if doing it online - copy all the text, paste into a new Word document, then 'Save As' a PDF document then upload to the HMRC website with your online return.

[david77] 30/1/2012 11:01

It looks ok to me - you need a newline before "Total gain = ..."

The output from my prog was intended to meet what the taxman wants - just print the lot off and send him that with the completed CGT1 form.

[david77] 30/1/2012 08:09

I'll let Miata or Gengulphus answer 168.

170 - The taxman doesn't need the average figures.

It's very easy to get a data entry wrong. My prog calcs the average and uses that for subsequent calcs. The prog compares the share price with the average so that it can report if they are very different - but that can be turned off.

[singh is king] 29/1/2012 16:43

Cheers david.

[singh is king] 29/1/2012 16:43

david when submitting ones share transaction details using the stonebanks calculator,is it best to include the average price paid or received optional information?
Many thanks.

[singh is king] 29/1/2012 16:43

Another query i`m afraid.
To do with rights not taken up in a rights issue.
Made the mistake of not taking up my rights in the FPM rights issue in May 2010.
As a result i received compensation for the rights not taken up.
My question is,where do you account for this money on your tax return?

[david77] 29/1/2012 16:23

Sounds right to me - but you ought to wait for an expert opinion.

[singh is king] 29/1/2012 15:40

Would appreciate any help with the following.
Just finalising my return for 2010/11 and have a query with regards to an inter spouse transfer that i did.
Details as follows:
1)Transferred 10K shares to my wife, in company x at a pool cost of 34.0951p on 02/02/11.
2)For some reason i repurchased 5K shares in company x on 15/02/11,(ie within 30 day`s of the transfer), at a price of 171.72p.
3)My wife sold 8800 of the transferred shares on 25/03/11,(ie more than 30 day`s after the transfer).
Because i repurchased 5K within 30 day`s of the transfer,should the average price used for the transfer not go up?
Both the calculators show the average purchase price for the transfer on 02/02/11 remaining the same,despite the repurchase.
Both the calculators match the 5K buy on the 15/02/11 with an earlier sale on 17/01/11 for 10K shares-presumably because of the 30 day matching rules.
Does this sound correct and is this why the average cost price for the transfer on 02/02/11 has not been altered by the later buy on 15/02/11?
Hope this makes sense.
Many thanks.