Capital Gearing Share Discussion Threads

[rockefella] 04/3/2012 09:05

Help requested with regards to using cgtcalculator,have been messing about and tried to copy items from my halifax sharedealing account but comes up with a message stating on the lines of error/invalid.

Using the convertor it gives you three options Format 1 or 2,also copying to notepad on microsoft word.
Anyone any clues as best or most appropriate method, appreciated thanks.

[david77] 04/3/2012 09:01

"why not give a bit back."

I don't know how much gain Howard Smith expects to make, but just for interest, how much would the "bit" be on a million quid gain?

If top politicians can arrange their affairs to minimise tax, then I don't see why others shouldn't do it. That is the risk that ministers take - raise the tax too high and people take steps to avoid it.

My brother-in-law is looking at Malta to reduce his tax bill.

[someuwin] 03/3/2012 23:46

...Or, pay the tax and feel good about it. The returns on GKP have been spectacular - why not give a bit back.

[miata] 03/3/2012 23:31

Move to a tax haven now. (Bermuda, Cayman Islands, Belgium, Gibraltar, Panama, etc).

Panama has no tax on offshore derived income, no capital gains tax and no inheritance tax. It has great food, great medical, and is very safe. The internet is great. Residency is not hard. There are no hurricanes in Panama, no volcanoes, no earthquakes, and no tsunamis. It is tropical warm year round. Real estate is affordable and hired help is cheap.

[howard smith] 03/3/2012 21:23

Please help

I would like to know how to avoid paying a substantial amount of cgt if a company I'm invested in is bought out and I end up with a large amount of cash in my bank account (the company is an aim company and is registered in bermuda and my share account is a nominee account with hsbc uk and I currently live in the uk). Can I just move abroad for five years or so and come back and all is forgotten or can/should I move my share account to an overseas holder before the potential buy out happens and not have to worry about it?

Any help on this scenario greatly appreciated.

Thanks in advance for any help here.

[rockefella] 03/3/2012 13:56

Help requested with regards to using cgtcalculator,have been messing about and tried to copy items from my halifax sharedealing account but comes up with a message stating on the lines of error/invalid.

Using the convertor it gives you three options Format 1 or 2,also copying to notepad on microsoft word.
Anyone any clues as best or most appropriate method, appreciated thanks.

[sleveen] 03/3/2012 08:34

Thanks MIATA. Was there something else in your post as there appears to be symbols of some description in it?

[brancho] 02/3/2012 11:28

Thank you M

[brancho] 02/3/2012 10:19

I notice that from a previous post one could claim losses incurred in 2006/07 before 31 March 2012 provided no tax return was submitted/requested for that year. is this correct and are there any restrictions? Can i go back further than this to claim net losses?

[miata] 02/3/2012 09:27

Answer: No.

[on target] 02/3/2012 09:01

Auto-complete error, post corrected.

[miata] 02/3/2012 08:55

Quick ISA question - can losses made in a stocks & shares ISA continued to capital losses?

Quick question - what did you intend to convey by the words "continued to capital losses"?

[on target] 02/3/2012 08:50

Quick ISA question - can losses made in a stocks & shares ISA contribute to capital losses?

[miata] 02/3/2012 08:12

Neither. "
Disposals are identified in the order in which they take place"
thus to the 1st.


[sleveen] 01/3/2012 21:58

Can anyone help with my question please?

If I make 3 sales of 500 shares on say 1st, 5th and 15th of the month (ie 1500 shares in total)and part rebuy 300 of them on say the 18th (ie 30 day rule applies) are the 300 I rebought on the 18th matched to the last sale ie the 15th, OR are all 3 sales pooled at an average sold price and then the 300 rebought shares matched to the average pooled price of the 1500 shares sold.

[brancho] 01/3/2012 11:17

Thanks G.

I notice also that from a previous post my wife could claim losses incurred in 2006/07 before 31 March 2012 provided no tax return was submitted/requested for that year. This is the case for my wife but not me ( I submitted a return for that year).

[gengulphus] 01/3/2012 11:10

Brancho,

With regard to your point 1, I did tell you in post 6488 that in the case of you not having had to complete a tax return previously and you submitting a claim for the losses, "He might respond by asking you to fill in a 2010/2011 tax return". You hadn't mentioned your wife being involved as well at that point, but clearly the same applies to her!

It would be nice if the taxman hadn't felt it necessary to ask for full tax returns, and I suspect he wouldn't in some circumstances. But I'm afraid I don't know how he decides!

And I'm also afraid that there is no way for someone who has not previously been sent tax returns to claim capital losses without taking the risk that the taxman will respond by sending them tax returns. Claiming the losses necessarily involves bringing yourself to the taxman's attention, and he can quite legitimately ask anyone to submit a tax return for just about any reason he chooses, so if you draw yourself to his attention, you might get sent a tax return.

As regards getting "agreement of losses claimed", don't expect to! The self-assessment system generally works on the basis that you say what you believe to be the correct tax situation, and the taxman either accepts your assessment silently or expresses disagreement with it. I.e. you need to proceed on the basis that the losses you have claimed are accepted, until and unless the taxman objects - not wait for him to say they're OK, because you'll probably end up waiting forever...

With regard to your point 2, I doubt the taxman really cares which way you do it - they should produce the same answer apart from rounding differences, and while the taxman does specify rounding rules, he generally doesn't seem to care that much about such small differences.

For what it's worth, I would personally calculate the full losses and gains and then halve them at the end. That's mainly because halving the trades involves dealing with half shares if any of the trades are for odd numbers of shares, rather than only dealing with whole numbers of shares. The latter is likely to be generally easier, though I've no idea by how much - it depends e.g. on whether any software you use for the computations can cope with fractional shares.

Explaining that it's a joint account is a good idea, but no need to spend many words on it. A professionally drawn-up tax return I've seen contented itself with a simple "Held jointly with spouse", for example.

Gengulphus

[brancho] 01/3/2012 09:51

Gengulphus post 6488,
Carrying on from this, I submitted comps for registering CGT losses with HMRC for both my wife and my self - joint trading account ie account held in both names. 2 points:

1. My wife never submitted a tax return for the previous years we are claiming for (08/09, 09/10, 10/11). But to just submit the CGT part of the tax return was not enough. HMRC has asked her to do a full return for the those years - a point for others to note. She has never been asked for a tax return before. I have submitted returns for those years for me at the time so still waiting a response/agreement of losses claimed.

2. The account is a joint account so should I have divided all the trades in half, list them and do the comp that way or do I list the trades in full and then divide the loss/gain at the end explaining it is a joint account for both of us?

[tehmac] 28/2/2012 15:30

Okay, fair enough. That would still get around the issue of having to monitor everything for tax purposes, which would be very nice. I can live with the excess commissions on each trade if I know I'm not being taxed on any gains :-)

[miata] 28/2/2012 15:25

I assume I can still convert my balance to $ within the ISA

No, you assume wrong.

The Individual Savings Account Regulations 1998

6.-(4) Subject to paragraphs (5) and (6), an account investor's cash subscription and any other cash held by an account manager under an account shall be held only in sterling ......

[tehmac] 28/2/2012 15:10

Wow, that was a comprehensive and exhaustive post. Thanks very much for taking the time to write all that out. I very much appreciated it. You certainly have a strong grasp of all this. I admit a lot of that goes over my head. Typical jargon that they use to confuse us mere mortals :-) I shall read and re-read that.

I just had a thought though. Would I be correct in thinking that to avoid any issues of having to monitor everything, I could simply use an ISA for my US trading as I purely trade the NASDAQ, which according to this page shows that the NASDAQ stocks can be traded within an ISA? I assume I can still convert my balance to $ within the ISA and trade as normal? Therefore use an ISA for my US trading and record as normal my UK trading that would not be in an ISA in the UK.

[gengulphus] 28/2/2012 14:26

1). My query is, how would I log the currency side of things in this format for their system when converting back and forth GBP to USD and USD to GBP in my account (not when buying or selling shares). I'm trying to make this as simple and least confusing as possible.

I.e. basically, can you treat your holding of USD as though it were a shareholding, with purchases matched to sales according to the share identification rules? (Which is one of the primary things the CGT calculators do for you.)

I don't know for certain, because I've seen at least apparently-conflicting remarks about it even in HMRC's CGT manual... :-( On the one hand, states that

"For the purposes of the share identification rules TCGA92/S104(3) provides that 'securities' does not include relevant securities as that term is defined in TCGA92/S108 (see CG50224) but, subject to that, means
•shares or securities of a company; and
•any other assets where they are of a nature to be dealt in without identifying the particular assets disposed of or acquired.

The definition of securities in TCGA92/S104(3) includes the word that it is seeking to define. The reason for this is that the share identification rules are intended to apply to all fungible assets such as shares, securities and foreign currency. The term 'security' is a convenient way of describing all these assets. Fungible assets are ones which it is not possible to identify individually in a holding of more than one because they are functionally identical. For example, all ICI ordinary shares and all €100 notes are for practical purposes interchangeable. If a person sells some of their shares, they cannot identify which shares have been sold."

Which seems pretty clear that the share identification rules are intended to apply to foreign currency.

But on the other hand, seems pretty clear that, at least since 6 April 2010 and for foreign currency held in bank accounts (which I imagine would include broker accounts), the share identification rules should not be applied. And as I read that page, there is an implication that use of the share identification rules was never really the right approach, but HMRC concede that it wasn't really clear and so previous use of them will be accepted.

A more general look at the pages about foreign currency linked to from says that there is a distinction between foreign currency held in cash form and foreign currency held in a bank account, in that the latter is treated as a debt owed to you by the bank rather than as foreign currency itself. So the bit in the last paragraph about it being "foreign currency held in bank accounts" is significant. (And there are other implications - e.g. if you have a USD bank account and you deposit USD cash in it, that's a disposal of the USD cash asset and an enhancement of the USD bank account debt owed to you for CGT purposes. I.e. despite the intuitive idea that there is no change of asset involved, technically there is one and any unrealised gain on the USD cash becomes realised at that point... Ugh! Though it's not quite as bad as it seems, as (roughly speaking) foreign currency held for spending purposes is exempt from CGT - it's only foreign currency held for investment purposes that you need worry about, and I suspect that if you hold that in cash form the CGT issue isn't the only problem you'll have!)

I think the resolution of all of that is basically that, assuming it is held in accounts rather than as cash, foreign currency is treated as a single "debt owed to you" asset (even if it's held in multiple accounts - see the end of ).

If I've understood that correctly, it means that the share identification rules do not apply to foreign currency held in accounts, as those rules are intended to deal with cases involving multiple assets that are not distinguishable from each other in practice rather than with single assets that can be enhanced and part-disposed. And that implies that the CGT calculators will give incorrect results for foreign currency held in bank accounts. (Unless you're fortunate enough that the same-day and 30-day rules never apply and every gain is calculated as a Section 104 pool gain. That's because the Section 104 pool rules are basically identical to the rules for enhancing and part-disposing a single asset, but with the shares matched under the same-day and 30-day rules being excluded from that asset - so as long as there are no such exclusions, the Section 104 pool rules will produce the right result.)

No guarantees though that I have understood it correctly!

2). My other confusion arose when MIATA was talking about monthly average exchange rates which was making me think I was able to use one average exchange rate for all my buys and sells during that month, rather than the above example you gave where I simply record what the exchange rate was at the point of buy or sell and log that. I'm not sure what the pros and cons of each are, or even if that was what MIATA was meaning.

I don't fully understand the rules about which exchange rates to use either! But I do know that there are circumstances in which you definitely can use monthly averages, and I've got the impression from various sources that the taxman isn't too bothered about small discrepancies in exchange rate caused by exactly how you obtained them, provided (a) that they're realistic - I would want to be able to point to my source and would want it to be a reputable one; (b) that they're obtained in a consistent fashion. I.e. using exchange rates on the day of the transaction is OK, or using monthly average exchange rates is OK, but don't mix-and-match. And especially, don't try out each possibility on each transaction and then select the exchange rate that produces the better tax effect on a case-by-case basis!

One case where using monthly averages is explicitly indicated as OK is when there are a lot of transactions on an account - see (which incidentally confirms my impression that HMRC don't care all that much about the exact exchange rate as long as it's from a reputable source) and .

My personal inclination would be that if I were doing a lot of trading on the USD broker account, so that most months had multiple trades in them, I would deal with the CGT computations on the holding of USD using the monthly average method described in those last two links, and then for consistency use those same exchange rates in the CGT calculations for the shares themselves - that ensures that gains and losses don't slip through in the difference between the exchange rate used for a currency disposal and the corresponding share acquisition (with a lot of trades, you'd have to be very unlucky for that to result in a large net gain slipping through - but it is possible to be very unlucky!).

On the other hand, if the rate of trading were low, with a typical month only containing one trade or fewer, I would be inclined to use the exchange rate on the day of the trade for both the currency and the share CGT computations - basically, without the "large numbers of transactions on bank accounts" ingredient mentioned at the start of the first of the two links, I wouldn't feel comfortable using the method it describes, and anyway, there wouldn't be any significant saving in the amount of computations from using it!

And yes, I'm afraid there is a bit of a grey area between "multiple trades" and "one trade or fewer", in which a judgement call may well be needed. But as long as you don't make totally silly judgement calls and you do things reasonably consistently, I think you should be OK.

Gengulphus