Capital Gearing Share Discussion Threads

[s2lowner1] 28/1/2021 15:52

As I understand

You do not have to REPORT losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset. But you can use recorded losses as far back as before 1996

HMRC says Businesses must keep records for 5 years after the deadline. but I can't see anywhere it says the same for personal CGT losses.

[arab3] 28/1/2021 15:31

I thought it was only 4 years, will check

[orchestralis] 28/1/2021 15:25

I think I read somewhere that you can only claim losses in the last 6 year period, anything before that can't be.

[s2lowner1] 28/1/2021 15:20

Hello I wonder if you could advise re record keeping

I have CGT losses which I carry forward each year that may be useful to me as gains are taken off accrued losses first before annual CGT allowance. I intend to use these against gains where I buy outside of my ISA and Sipp, to provide additional retirement income as dividends or taking gains.

I have records of share contract notes (tax invoice) going back 20 years which are bulky so was wondering what year can I shred them upto and what would I need to keep to prove my historic reported HMRC losses if required to do so ? I have submitted yearly returns recording the losses with spreadsheet back up which have never been contested

Thanks s2lowner1

[lozzer69] 28/1/2021 11:06

How will the trust perform when Peter Sillar hangs up his boots. I want to buy a defensive trust to sit alongside Lifestrategy 20pc and it's this or PNL or both

[dean moriarty] 14/1/2021 10:49

I have never paid CGT. I may soon have to. Unfortunately I have lost the stock trading documents from previous deals, mostly loses, and brokers like Beaufort who I used have closed. Can you please tell me the best way to obtain copies to prove loses or do I submit recreated records mentioned by HMRC?

[prolapse] 29/12/2020 12:21

Thanks chaps, as I suspected.

Thametrader, the reason is this. If you have already used some of your current year ISA allowance with broker A, but broker A does not trade stock on ASX were you might want to purchase a stock. Then you are forced to use broker B who does trade ASX, but then can't use up remaining ISA allowance to do so.

[zangdook] 29/12/2020 11:52

You're right, the answer is no. You might be able to put all the money in one account and then transfer some of it to another account later, but all the brokers I've been involved with seem to insist on transferring all or nothing. I don't know if there's a rule about that or if it's just the brokers being annoying.

[thamestrader] 29/12/2020 10:45

Even if you could, why would you? Two lots of fees, two apps, two everything.

But anyway, I think the answer is no. You can only have one S&S ISA per year. You have to provide your NI number when you apply, and I think this is so they can easily check if you already have one for that year.

Happy to be corrected on this if I'm talking rubbish (wouldn't be the first time).

[prolapse] 29/12/2020 10:26

Could anyone answer this question please.

Can I use my annual stocks and shares ISA allowance for a specific year (this year) with more than one broker? For example £5K in an Barclays stockbroker ISA and £5K in a lloyds stockbrocker ISA.

[bunlop] 18/12/2020 18:59

Pedr01 - I am inclined to think that as the payment was for compensation for misleading me that it would be not subject to income or capital gains tax. However I am not 100% sure of this.

[pedr01] 15/12/2020 22:20

1166:-
bunlop,

In the absence of a "proper" answer from G, and given that it is effectively proceeds from RCN and you received monies this year, I would include a dummy buy/sale into my CGT calculations/summary sheets for this year, viz;

Stonebanks pseudo =>

Dummy RCN (DRCN) ; Dummy buy/sale to adjust for £1305 payment
06/08/20, B, 1305, 0.0, 0.0 ; from RCN Shareholders Compensation scheme.
06/08/20, S, 1305, 100.0, 1305 ; Original RCN shares sold on 07/11/16

Is this correct? Who knows, but it is what I would be doing the circumstances unless advised otherwise.

Originally I thought you should adjust your 2016-2017 calculations/tax return, but then you only received the money this year???

[bo doodak] 15/12/2020 12:43

Cheers serratia, its good to know I was worrying unnecessarily.

[serratia] 15/12/2020 10:54

I have 2 ISA's but only contribute to one of them each year. When I add to the one I didn't use in the previous year they just say ok we'll reactivate it. As long as you only contribute to one in a tax year you're ok.
My wife has 2 as well.

[bo doodak] 15/12/2020 08:39

I'm currently with IWEB as well, so that's really useful to know.

Thanks zangdook.

[zangdook] 15/12/2020 05:19

As long as you don't sign (or box-tick) an ISA application for the new year with the old provider, and don't add any money, I think you're ok. I have ISAs with two providers; iWeb puts something about "unused allowance 20k" at the top of the page at the start of the year, but it doesn't mean anything unless I choose to use it. HL bombards me with emails about how important it is to use my allowance, but I ignore that, too.That's my opinion, anyway. You could always send a message to your current provider saying you don't intend to open a 2021 ISA with them.

[bo doodak] 15/12/2020 00:07

Hi, I was hoping to clarify whether this is a valid concern I’ve got, or not.

My current self-select ISA provider automatically applies a new £20k stocks allowance at the start of every tax year.

Next year I wish to open and contribute £20K to a new provider.

If I contribute to this new provider's account would I be judged as having 2 ISA’s open in one tax year, by virtue of my current provider adding on a new £20K limit, even though I would not contribute anything into my current providers ISA?

Thanks

[bunlop] 05/12/2020 19:52

Hello Gengulphus, Redcentric (RCN) paid shareholders compensation for people who purchased shares between 9/11/15 and 7/11/16. I sold all my holding on 7/11/16. But I have now been paid £1305 compensation which I received on 06/8/20 following an agreement between Reedcentic and the FCA.
Is this subject to tax and if so what tax and how do I declare it?
Many thanks.

[luderitz] 17/11/2020 21:51

The Con party are desperate to appeal to people’s selfishness before each general election to get them to vote for them. Bearing in mind that they primarily and historically exist to feed the very very rich the Con party must get tax by other means I.E. capital gains being one of them.

[zastas] 17/11/2020 15:25

Correction.

I found a solid short article by the DT form years ago.

It states CGT started 1965 ( Labour ). Initial allowance was £9.500.00 . I estimate cumulative inflation to be about 1200%. So that is about 120k in today's money. But would feel like getting an allowance of about 250k with today's income. Imagine!

[zastas] 14/11/2020 16:31

There is huge ignorance about the history and changes to CGT. Even the MSM rarely present a good factual historical article/document to enlighten their audience, to put it all in context.

I thought I knew a lot, mainly the changes post 1997. But recently I read that when introduced, the CGT tax-free allowance was the equivalent of about 150k in today's money. That is just the about 1000% inflation since 1967. Given that also real GDP/head grows by about 1-2% annually, it would feel now more like 300k of gains.

Talking about relentless tax creep. I am sure Gengulplus can be more precise.

[thamestrader] 14/11/2020 14:16

Threats to GCT rates and exempt allowances have raised their ugly heads again! This from Interactive Investor (a similar item in today's Daily Mail (my friend says)):

-----

The Office of Tax Simplification (OTS) today released a report suggesting 9changes to CGT) could raise £14 billion. .... Currently, basic-rate taxpayers pay 10% tax on capital gains, above a £12,300 a year threshold. Higher-rate taxpayers pay 20%. ... The OTS suggested doubling this to bring CGT more in line with income tax. ... The (OTS) also suggested lowering the CGT threshold to as little as £1,000 to increase the number of people paying it.

-----

No mention of timing, and if the Autumn budget/statement is cancelled, maybe it won't apply from April 2021, but the year after?

[panshanger1] 12/10/2020 09:43

Love this trust Great core holding for wealth preservation ( alongside Personal Assets)Need to keep Peter Spiller going

[thamestrader] 23/9/2020 20:30

Thanks Gen. for your very comprehensive and well considered thoughts.
Boris has today announced the cancellation of the Autumn statement/budget, so it looks like nothing will change anytime soon.

In my case, this means no tax-related reason to rush to crystallise further gains this tax year. There might be other reasons, however: better to pay tax on a gain while i still have one, than to have no gains to pay tax on following a market crash.

[gengulphus] 23/9/2020 18:00

Does anyone else out there think CGT might be an easy target for the chancellor in his quest to fill the financial black hole caused by Covid?

I don't. A target, quite possibly - but not an easy target... It's not easy because to a large extent, CGT is a voluntary tax - make changes designed to raise more CGT from investors, and investors are likely to respond by changing their strategies to be more likely to hold on to investments carrying a large unrealised capital gain rather than selling them and realising the gain... Doing that won't always be possible - sometimes people need the cash or the sale is compulsory for one reason or another - but I suspect there will be plenty who shift to a long-term buy & hold strategy if CGT becomes a serious burden...

Also, the investors most likely to want not to do that are those who use shorter-term 'trading' strategies. But many of them will have bought their shares last year and so will be sitting on plenty of unrealised losses, not gains...

He might remove the £12300 allowance, he might increase rates, he might do both.

Removing the CGT allowance strikes me as very unlikely, at least as things stand. Why? Because then everybody who makes even a small capital gain becomes liable to account for CGT, either in a tax return or using some sort of adjustment to their tax code - but that adjustment is likely to change every year, in a hard-to-predict way, so would require some sort of annual return from the taxpayer anyway. Either way, there would be a big increase in the number of CGT returns HMRC would need to process, quite often for very small amounts of tax collected - so removing the CGT allowance entirely would probably not be cost-effective because of high collection costs relative to the amount of tax collected. And in addition, it would also have high political costs for the government - a CGT return is a distinctly user-unfriendly bit of bureaucracy and making large numbers of voters do them who hadn't had to before is likely to alienate a considerable number of voters!

That said, I do think reducing the CGT allowance might be an option for the Chancellor. E.g. halving it rather than removing it entirely would affect far fewer taxpayers and would tend to be focussed on those with the largest capital gains among those who currently don't pay CGT, as well as producing a substantial increase in CGT collected from those who do currently pay CGT. That's more likely to be cost-effective from the Chancellor's point of view, both with regard to collection costs and political costs.

And increasing CGT rates is also an option. But both reducing the allowance and increasing rates are going to be limited in terms of how much they're likely to raise, due to the 'largely a voluntary tax' nature of CGT mentioned above.

Various parts of that assume that the structure of CGT and collecting it remain largely as they are at present, and there are possibilities available for more fundamental revisions of CGT that would change the argument. For instance, brokers cannot currently give definitive statements about what capital gains and losses have been realised by sales in a broker account they provide, because if the accountholder has other holdings of a share (either certificated or held with another broker), CGT rules require the capital gains and losses to be calculated from the merged transaction record for all the holdings, not separately for each holding and the results added together. If CGT were revised to work on a 'separately on each holding and add together' basis, it would become possible for brokers to produce definitive CGT statements, and therefore for the government to require them to do so. And if that were done, CGT returns by individual taxpayers could become just a matter of taking the figures from each broker they use and adding them up - much as they handle dividends at present. That would be likely to reduce the costs significantly, both collection costs and political costs.

Another example of a fundamental revision that might be attractive to the Chancellor is finding some way to tax all gains, whether realised or not (though the attractiveness of that might not be all that high at present, given recent losses...). But both of these fundamental revisions have a whole mass of practical detail to be designed - for example, how are transfers from one broker to another handled? how are certificated holdings handled? what happens if someone has big unrealised gains on shares that for some reason they cannot sell? and many others...

So while fundamental reform of the CGT system might be a way for the Chancellor to effectively target CGT as a source of significant extra tax revenues, I'm pretty sure it's not an easy way for him to do so.

Gengulphus