Capital Gearing Share Discussion Threads

[gengulphus] 23/2/2015 14:32

I have some Angle plc (AGL) shares and have applied for some under their open offer. The new shares will come with EIS tax relief so I will not include them on my list of share deals for CGT calcs. If I subsequently sell some AGL shares, can I choose whether the shares sold were EIS shares or not?

I don't think so - there appear to be special share identification rules for EIS shares: see and the pages it links to. Don't expect me to explain them, though - there look to be a lot of interactions with various reliefs that I at best only half understand!

And is are the CGT calcs for non-EIS shares affected?

The same link indicates there is no pooling of EIS shares and other matching rules don't apply, which I think indicates that the CGT calculations for non-EIS shares happen independently apart from the issue of whether it is EIS or non-EIS shares that have been sold. I.e. I think basically no, the CGT calculations for non-EIS shares are not affected.

Gengulphus

[david77] 22/2/2015 13:18

I have some Angle plc (AGL) shares and have applied for some under their open offer. The new shares will come with EIS tax relief so I will not include them on my list of share deals for CGT calcs. If I subsequently sell some AGL shares, can I choose whether the shares sold were EIS shares or not?

And are the CGT calcs for non-EIS shares affected?

[karateboy] 07/2/2015 22:21

I have a SIPP account which I don't pay CGT or taxes on dividend, advantage of SIPP against normal trading account. Is the status of the SIPP account changes to normal trading account i.e paying CGT,..as soon as I started taking income as a pension? Or it stays as SIPP even after taking pension?

[red nutter] 05/2/2015 15:15

ok I will try that - thanks!

[gengulphus] 02/2/2015 17:07

Change it from the date you bought it, and add a comment to your input file to say what you've done. I don't remember exactly what facilities CGTcalculator has, but if possible use a comment that will be echoed to the output.

You could normally also do it the other way, as long as you made certain that the amounts for the fictitious sale and purchase on the day of the name change were identical and that the fictitious sale resulted in a gain/loss calculation result of £0.00 - i.e. neither a gain nor a loss. But if you were unlucky, I think that fictitious sale and purchase might change the way sales and purchases were matched to each other, resulting in an incorrect calculation. It's easier and simpler not to have to think through whether that actually could happen and how to detect whether it has done if so...

More generally, try to avoid techniques with either of the calculators that involve making up fictitious sales and purchases - i.e. ones that didn't really happen. They're generally at risk of incorrect matching of sales to purchases and consequent incorrect results if one is unlucky about the dates - and the only real way to guard against that is to do the calculation by hand and compare with the calculator's results, which rather defeats the object of using the calculator in the first place!

Gengulphus

[red nutter] 27/1/2015 17:18

Hi - I am using hxxp://www.cgtcalculator.com and wanted to know how I enter a share name change from one company name to another if covers different tax years.

Do I just change it from the date I bought or pick the date the name changed and do a sell and buy for same price but diff company name.

Thanks

red nutter

[pedr01] 19/1/2015 18:17

Thanks Gengulphus ... appreciate it ...

[gengulphus] 19/1/2015 14:15

Pedr01,

I cannot answer your actual question properly, but I have found a couple of links you might find useful:

allows you to get an estimate of the amount owing, including penalties. It only seems to cover past tax years for which penalties already exist, so you might have to give it information as though things happened a year or two before the real dates that you're thinking about, but that's probably just makes it a slightly less accurate estimate...

and chasing up the links in it might be useful, though bear in mind the fact that it's really aimed at tax advisers, not individual taxpayers.

I can also suggest a couple of tactics that might be useful: if you sell shares and buy them back in the following 30 days, the capital gain or loss on them is calculated as the price you sell them for minus the price you buy them back for (to keep things simple, buy back exactly the same number of shares as you sold, otherwise you get into apportionment calculations...), and the original purchase price stays around to be used when you eventually sell the shares. That capital gain or loss is likely to be fairly small and so not to perturb your CGT calculations all that much. That effectively gives you an extra 30 days to come up with the cash needed to pay the tax bill - and you can repeat it with another share if necessary. E.g. if you need £5,000 to pay the tax bill, you might do something like (ignoring trading costs on the assumption that they can come out of dividends or other spare cash):

20/01/2015: Sell 2000 AAA shares at 250p to raise £5,000
25/01/2015: Withdraw the £5,000 and use it to pay the tax bill
15/02/2015: Sell 1000 BBB shares at 520p to raise £5,200
16/02/2015: Buy 2000 AAA shares at 260p, costing £5,200
10/03/2015: Sell 700 CCC shares at 700p to raise £4,900
11/03/2015: Buy 1000 BBB shares at 480p, costing £4,800
06/04/2015: Sell 2000 AAA shares at 270p to raise £5,400
07/04/2015: Buy 700 CCC shares at 720p, costing £5,040

If the 2000 AAA shares were originally bought for say 100p each, just selling them on 20/01/2015 as above and doing none of the rest of the above will give you an extra capital gain of £5,000-£2,000 = £3,000 in the 2014/2015 tax year. But by doing all of the above, the '30-day rule' causes:

* the 20/01/2015 sale to be matched to the 16/02/2015 buy, realising a loss of £5,000 - £5,200 = -£200 in the 2014/2015 tax year;

* the 15/02/2015 sale to be matched to the 11/03/2015 buy, realising a gain of £5,200 - £4,800 = £400 in the 2014/2015 tax year;

* the 10/03/2015 sale to be matched to the 07/04/2015 buy, realising a loss of £4,900 - £5,040 = -£140 in the 2014/2015 tax year;

* the 06/04/2015 sale to be matched to the original buy, realising a gain of £5,400 - £2,000 = £3,400 in the 2015/2016 tax year.

So the net result of that particular set of numbers is the tax bill paid on time, at the cost of an extra £60 of net gains in the 2014/2015 tax year and some trading costs, and the main capital gain realised in the 2015/2016 tax year.

No guarantees you'll get those particular numbers, of course! Such techniques are mostly in the lap of the gods as far as the extra gains and losses realised in the current tax year are concerned - though they'll usually be small (take care to go for your more stable shares, avoiding ones expected to announce results, etc, while you're out of them), and if they do happen to become too large, an extra sale at a suitable loss or gain might be indicated.

Alternatively, and much more simply, have you tried asking HSBC (or some other bank) whether they will offer you a more formal overdraft facility?

Gengulphus

[pedr01] 15/1/2015 11:53

Does anyone know what the penalties are for paying your self assessment tax (inc CGT) late ???

My plans for paying off the taxman have been scuppered by HSBC changing the terms and conditions on the InvestDirect account, where you can no longer use the account as as "overdraft" facility.
Sold sufficient to pay taxman on monday but now cannot withdraw the proceeds. Am reluctant to sell and more shares in this tax year (to be able to withdraw)as will incur CGT for this year as well. Hoping to put off fateful day till next tax year.

Anyone (??) know what the penalties are ???

Thanks loads in advance.

[someuwin] 08/1/2015 11:09

Problem solved Gengulphus. I had stupidly omitted to put the 'amount of tax taken off pay' in the box.

Thanks for your help.

At least I learned a bit more about the system though.

[largeronald] 08/1/2015 09:17

Gengulphus -

Basically yes and yes - though I'm reminded of the old riddles along the lines of "If I regard my dog as having five legs and me as having three, how many legs do I and my dog have between us?". Answer: "Six - my delusions don't alter the facts!" ;-)

Nice one :o)

Thanks again for your help.

[someuwin] 08/1/2015 07:26

Thanks Gengulphus - I'd better do some digging.

[gengulphus] 07/1/2015 23:21

From what you say, my first guess would be an input error somewhere, causing the system either to believe your tax due is higher than it really is or that your tax deducted at source is lower than it should be. Other possibilities are that you've overlooked some source of income that has Income Tax due on it and not deducted at source, or (less likely but not inconceivable) you've stumbled on some error in HMRC's systems.

About the only methods I know of for working out which it is are:

* Double-check all the figures you've put into the return very carefully - both that they're the right figures and that they've been put in the right places!

* Failing that, go through the tax calculation manually, using , cross-checking against the online system's calculation and sanity-checking each major 'milestone' figure to see whether it looks to be in roughly the right area.

Gengulphus

[gengulphus] 07/1/2015 22:22

Tarny,

Hi all - A quick question....If I go above the CGT threshold of £11,000 what do I need to do.

If the taxman sends you a tax return (typically near the start of the following tax year), you have to fill it in in accordance with its instructions. Those instructions include filling in its Capital Gains Summary supplementary pages and accompanying them with your CGT computations in a number of circumstances - see section "7. Capital gains summary" on page TRG 5 of . One of those is your gains (without deducting losses from them) going over the CGT allowance, which is bound to happen if you've got any CGT to pay.

I.e. if you're sent a tax return and you've got CGT to pay, you're certain to have to fill in the Capital Gains Summary pages and accompany them with computations. You might also have have to do that in some cases where you're sent a tax return and you don't have CGT to pay: once you've been sent a tax return, it's the instructions in the above link that matter, not whether you have CGT to pay.

If the taxman doesn't send you a tax return to fill in and you've got CGT to pay, you're legally obliged to inform the taxman of the fact by the October 5th six months after the end of the tax year concerned (see for confirmation of this). He will probably respond by sending you a tax return, at which point all of the above starts to apply.

For completeness, if the taxman doesn't send you a tax return and you don't have CGT to pay, you don't have to do anything about CGT (though if you haven't had all the Income Tax you owe deducted at source, you do have to notify the taxman about that!).

As regards how the taxman knows if you fail to stick to the rules, he might not - but it's very difficult to determine whether he knows or not, and there are various penalties for breaking the rules. How he might know is known in broad outline: for instance, he is entitled to (and does) get regular returns of various tax-related information from UK financial providers; he shares information with many other countries' taxmen; he receives information volunteered by members of the public. But exact details of how he puts all that information together are generally not available...

Gengulphus

[gengulphus] 07/1/2015 21:40

someuwin,

Just filling in my online tax return and on page 6 "View Your Calculation" it's charging me half the tax for next year up front.

"First payment on account for 2014-15" £xxxxx

I've never seen this before. Anyone know what that's all about?

It's about them collecting Income Tax earlier than they might otherwise when there is a large amount involved. Basically, in the normal course of events, they collect most Income Tax through PAYE, deduction of bank interest at source, etc, pretty much when the income that produces the Income Tax liability is paid during the tax year concerned. But Income Tax on income that does not have it deducted at source and is instead calculated by the tax return only becomes due on the January 31st in the following tax year - i.e. between about 10 and 22 months after Income Tax that is deducted at source. The Income Tax rules tolerate payment being that late as long as it's a reasonably small proportion of the total Income Tax paid, but if it's too big a proportion, they assume that you'll have the same amount of extra Income Tax to pay for the following tax year and collect half of it twelve months early on January 31st and the other half six months early on July 31st. Those two payments are called "payments on account" and then there is an extra "balancing payment" to be made to sort out any difference between what was paid as the payments on account and what is actually owing.

So in your case, your extra Income Tax to be paid for the 2013/2014 tax year has become big enough to trigger the earlier payments. As a result, you will have that amount of Income Tax plus an extra half of it as a first payment on account for 2014/2015 to pay on January 31st 2015, then another half of it as a second payment on account on July 31st 2015. Then in a year's time, you will calculate the total extra Income Tax due for 2014/2015: if it's more than the total of the two payments on account, you will have to pay the difference to the taxman as a balancing payment on January 31st 2016, and if it's less than that total, he will pay you the difference, basically finalising your tax payments for 2014/2015. And in addition, if the total extra Income Tax due for 2014/2015 is still big enough to trigger the earlier payments, that total extra Income Tax for 2014/2015 is used to set payments on account for 2015/2016, due on January 31st 2016 and July 31st 2016 respectively, and so things go on...

It's a bit of a shock when you first trigger the earlier payments, I'm afraid, with about twice the previously-normal amount becoming due over a January and the following July. It then settles back down to about the previously-normal amount in subsequent years (though with quite a bit of swinging around possible) as your payments start getting the credit of previous payments on account as well as the debit of new ones. That goes on until and unless you drop out of triggering the earlier payments, at which point you may well have a year in which the taxman owes you money because you're getting the credit of previous payments on account without the debit of new ones.

The system does assume that income and the Income Tax due on it doesn't change all that much from year to year, so that one tax year's extra Income Tax due is a reasonable guide to the next year's. If you know that it isn't, and in particular that less extra Income Tax will be due for the tax year for which the payments on account are being made than those payments on account, you can claim in the tax return to have the payments on account reduced. That could for instance be appropriate if you owned a lot of shares in a company that had paid a large special dividend in 2013/2014, that it was not going to repeat in 2014/2015. Make certain though that you don't claim to reduce the total payments on account below the extra Income Tax due for the tax year: if you do, penalties, interest and surcharges are liable to appear!

I've tried to be quite careful about saying "Income Tax" above, because payments on account don't apply to CGT. I'm sure the government / taxman would like them to, but I'm also fairly certain they know it simply isn't practical: capital gains / losses tend to vary so much from year to year that any assumption that one year's figure is even approximately applicable to the next year is likely to generate endless administration, complaints, appeals, etc.

Finally, if you want precise details of how payments on account are triggered and calculated, and of claiming to reduce them, see pages TCSN 22-23 in .

Gengulphus

[someuwin] 07/1/2015 20:12

Tarny

You now have to take into consideration your income tax level.

£11,000 cgt free then,

Its 18% for gains + income below high rate threshold (£31,865)

Then 28% for the portion over the threshold.

[gengulphus] 07/1/2015 20:07

largeronald,

However, just to clarify the order in which allowances/losses are used up:

To make life simple, regard annual CGT allowance as £10k.

Last year, I made a loss of £20k, therefore I carry forward a £20k loss to this year.

1. This year, I make a profit of £10k, which just happens to be the same as the CGT allowance. Am I right in assuming that I would carry forward my full £20k loss to next year?

2. This year, I make a profit of £20k. Would I be right in assuming I carry forward a reduced loss of £10k to next year?

Basically yes and yes - though I'm reminded of the old riddles along the lines of "If I regard my dog as having five legs and me as having three, how many legs do I and my dog have between us?". Answer: "Six - my delusions don't alter the facts!" ;-)

Gengulphus

[tarny] 07/1/2015 19:05

someuwin - Thanks. I'm asking for a friend who doesn't use bb's. Is the current tax rate 20% on any gains above £11,000?

[someuwin] 07/1/2015 17:30

Tarny - if you don't normally fill out a tax return and you think you'll be liable for CGT you should phone up HMRC and they'll send you the forms at the end of the tax year.

[tarny] 07/1/2015 17:26

david77 - Thank you. How will they know if someone has crossed the threshold? If you exceed the CGT allowance do you have to fill in a tax return?

[david77] 07/1/2015 17:20

They will send you a bill and tell you when it must be paid.

[tarny] 07/1/2015 17:11

Hi all - A quick question....If I go above the CGT threshold of £11,000 what do I need to do. Any help will much appreciated

[s2lowner] 06/1/2015 14:34

Thanks Gengulphus,

Its the description of the order in which HMRC apply them which threw me. If not read properly, it looked like you deducted the gains from the carried forward losses first rather than use your annual exempt amount and so carried forward reduced losses to the next year first and lost your annual exempt amount until you had used all your losses up.

I had forgotten about taper relief and clogged losses don't apply to me so I hope I am ok for another year and have preserved my capital losses to be used at a later date. Assuming the rules don't change

Many thanks for your help