Share Name Share Symbol Market Type Share ISIN Share Description
Capital Gearing Trust Plc LSE:CGT London Ordinary Share GB0001738615 ORD 25P
  Price Change % Change Share Price Shares Traded Last Trade
  +0.00p +0.00% 4,250.00p 12,247 12:19:40
Bid Price Offer Price High Price Low Price Open Price
4,240.00p 4,260.00p 4,250.00p 4,250.00p 4,250.00p
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 2.88 2.02 37.04 114.7 327.4

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25/4/201910:58CAPITAL GAINS TAX - with links to resources1,094
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Capital Gearing Daily Update: Capital Gearing Trust Plc is listed in the Equity Investment Instruments sector of the London Stock Exchange with ticker CGT. The last closing price for Capital Gearing was 4,250p.
Capital Gearing Trust Plc has a 4 week average price of 4,160p and a 12 week average price of 4,090p.
The 1 year high share price is 4,260p while the 1 year low share price is currently 3,950p.
There are currently 7,702,489 shares in issue and the average daily traded volume is 20,424 shares. The market capitalisation of Capital Gearing Trust Plc is £327,355,782.50.
david77: Type a list in wordpad then copy and paste to the stonebanks calculator Company date (6 figs 290817), b or s, share price (pence), total (£xx.pp)
gengulphus: What happens if there simply is no record? Do HMRC assume zero cost? You produce an estimated cost, put some sort of explanation of the estimate in the appropriate 'additional information' box, and tick the box saying that you've used an estimate. You want the estimated cost to be as high as possible, so that the gain over it is as low as possible. All HMRC do is look at the estimate and decide whether to challenge it - which they're likely to do if they think it's too high, but not if they think it's too low. Using an estimated cost of £0 is quick, easy and safe. You may be able to produce a safe higher estimate - e.g. if you know that the shares were bought during a particular period but don't know exactly when or how much was paid for them, then the number of shares times the lowest share price in that period is a safe estimate. But that does require researching what that lowest share price was, so involves more work than an estimate of £0. One does have to exercise some judgement about whether trying for a higher estimate is likely to be a worthwhile use of one's time. E.g. if it's only reasonable to expect to be able to raise the estimated cost by a couple of hundred quid, then the CGT saving at 20% is about £40 - which probably doesn't justify spending more than an hour or two on it (depends on the value you place on your time, of course!). If it's a matter of raising the estimated cost by a couple of hundred thousand quid, on the other hand, it might be worth spending quite a bit more time on it - and probably even some money on a good tax adviser... Gengulphus
gengulphus: Im glad you have mentioned the 3 part of bed and isa which is what im trying to solve I've looked on the hmrc app under isa, shares and cgt it does not mentioned what you have said about bed and isa being in 3 parts.... That's because "bed and ISA" is basically just the name of a package deal offered by some brokers: you ask your broker to do it and (assuming your broker offers "bed and ISA") you get its three parts (the sale outside the ISA, the ISA subscription and the purchase inside the ISA) as an agreed-once package from the broker. The same sort of thing as happens if you book a package holiday: the whole thing is agreed once, but has multiple parts (the flights, the hotel accommodation, the food, maybe some excursions, etc). The taxman won't in general have special rules for each part of such a deal: he'll just tax each part separately by the normal rules, which in the case of a bed-and-ISA are: * Sale outside the ISA: CGT might be due from the investor, according to the normal CGT rules. * Subscription to the ISA: No tax actually due, but the ISA provider will be required to report the subscription to HMRC. * Purchase inside the ISA: Stamp duty normally due, though it might not be (e.g. if the shares bought are AIM shares). The stamp duty is paid directly to HMRC by the broker, but the broker will pass the cost on to the investor via the contract note. So don't expect the taxman to have special rules about such package deals: he just taxes the separate parts normally. As another example, if your local supermarket has a "4 bottles for the price of 3" offer on beer, the taxman is still going to collect the excise duty on 4 bottles of beer: the fact that the supermarket is offering the 4 bottles for the price of 3 is simply a private offer the supermarket is making to its customers. Likewise, a "bed and ISA" is simply a private offer the broker is making to its customers. Unlike the supermarket offer, it's not offering the goods (i.e. shares) for free: the extra that it is typically offering the brokers' customers is typically just that the purchase will happen very soon after the sale, so that there is unlikely to be much change in the share price between them. And some brokers offer another extra: they'll only want a single commission for the package deal, rather than two separate commissions, one for the sale and the other for the purchase. But the taxman doesn't really care about those extras: as far as he is concerned, what has happened is three separate transactions: a sale outside an ISA, an ISA subscription and a purchase inside an ISA. Nothing more than that, nothing less. Just too clarify those three parts as I understand it it would be much simpler to just put cash in the stock isa than bed and isa and worry about the tax man... then you can buy and sell with in the isa all you want.. It would be simpler, yes, but it wouldn't do the same thing: it would only do the ISA subscription and the purchase within the ISA, not the sale outside the ISA as well. Whether that matters depends on whether you want all parts of the package deal... If you've actually got £15k of cash outside the ISA that's available for investment, you probably only want the ISA subscription and one or more purchases inside the ISA - which means that you might well not want the package deal. Whether you do depends on whether you want the gains or losses from the sale outside the ISA - you might want gains to use up your ISA allowance, or losses to offset gains in excess of the allowance - and on whether having to purchase the same share(s) inside the ISA as you sold outside it matters to you. If you do want the package deal, take the bed-and-ISA package; if you don't, don't: you can always put together the bits you do want yourself. For example, I recently wanted to shift some shares of mine into my ISA. But I wanted the gains on those shares to be realised in the 2014/2015 tax year, and I'd already used my ISA allowance for that tax year, so the ISA subscription would have to happen in the 2015/2016 tax year. Furthermore, I wanted to reduce the holding overall - i.e. I wanted to sell quite a few more shares outside the ISA than I wanted to repurchase inside it. So I didn't try to do a bed-and-ISA: as separate transactions, I sold outside the ISA on Thursday April 2nd to raise enough cash for the new year's ISA subscription, subscribed to the ISA on Wednesday April 8th, and split that subscription between three purchases on Tuesday April 14th (later than I'd planned, as the broker was unusually slow about processing the ISA subscription). That cost me a bit more than a bed-and-ISA would have done, both because of the extra broker commissions and because the price of the original share moved about 1% against me during the delay - but I reckon that was a price worth paying for ending up where I wanted and not somewhere else... As for the 3 part bed and isa lack of more detail info by hmrc on this is painful inadequate for PI's hence why im in here talking to you 1: is bed and isa exempt from being taxed while using the full £15,000 or No. I've told you in both of my previous replies that the sale part of the bed-and-ISA package is taxed by CGT just like any other sale outside a tax shelter, and now I've told you that again in this reply. I won't tell you it again after this - there's simply no point keeping on telling you if you're not going to believe me. 2: out of £15000, £11100 is exempt using cgt allowance while the remaining is taxed even though it is going into a bed and isa. So rather pay the tax its better to put the remaining as cash from a bank account savings or cash isa transfere savings to cut down on fees and unnecessary tax claims Closer, but still no. To deal with a minor point first, the ISA and CGT allowances this tax year are £15,240 and £11,100 respectively; last tax year they were £15,000 and £11,000. You're using a mixture of the two... Much more important, the money you raise from the 'sell outside the ISA' part of the bed-and-ISA is the proceeds of the sale (minus any selling costs) but CGT pays attention to the gain. They're not the same! As an example, suppose that in this tax year, you bed-and-ISA 1,000 shares and the sale part of that sells them at £15.25 each and pays your broker a £10 commission. It therefore neatly raises the £15,240 you can subscribe to the ISA (*). If the amount you originally paid for those 1,000 shares is £4,130 or more, you've realised a gain of £11,100 or less on them and so your CGT allowance will cover it. But if the amount you originally paid for them was less than £4,130, you've realised a gain of more than £11,100 and so some CGT will be due. And also much more important than the minor muddling up of the two tax years, any other gains and losses you realise in this tax year will change that position, and you're not necessarily in control of whether you realise them: takeovers and occasionally some other major corporate actions can force you to realise gains and losses that you don't want to. The upshot is that I cannot tell you how much the capital gain or loss will be from the sell part of a bed-and-ISA that puts £15,240 into your ISA: it could be any gain from £0 up to the full £15,240, or any loss at all, depending on what you originally paid for the shares (a gain of the full £15,240 is unlikely, but possible in at least a couple of circumstances). Nor can I tell you how much that gain can safely be without risking a CGT bill, because I don't know what other gains and losses you might have to realise this tax year. (*) Things seldom work out this neatly in real life, of course! ;-) Gengulphus
bagpuss67: thanks very much. now i see this CG56100 - Futures: financial futures: contracts for differences The term 'contract for differences' is not new. In its widest sense it refers to any derivative contract involving a cash payment, or series of cash payments, between the parties based on fluctuations in the value or price of property, or an index designated in the contract. It therefore encompasses many financial derivatives, including futures and options which can only be cash settled, as well as swaps. However the term has become associated with a particular type of contract (a "retail contract for differences") marketed, particularly to individual investors, alongside futures and options. Such a contract enables an investor to take a view on whether a share price, an index, or the value of an asset will go up or down. Typically, an investor enters into a contract for differences with a counter-party authorised under the Financial Services and Markets Act 2000, a derivatives broker. The investor may "go long" on the underlying asset or index, anticipating that its value will increase. In that case, he will receive a payment based on the increase in the value of the asset or index between his entering into the contract and closing out the contract. Contracts are commonly closed out by entering into an equal and opposite contract. Alternatively, if he thinks the value of the underlying asset or index is going to go down, he will "go short" in the contract, receiving payment based on the fall in value during the life of the contract. The investor will have to put up a deposit, commonly 20% of the value of the underlying asset, although it may range from about 5% to 35%. As the value of the underlying asset moves, he or she may be entitled to a refund of part of that deposit, or may have to increase it. In the case of contracts where the underlying asset is shares or a share index, the investor who goes long may also be entitled to receive a sum equivalent to any dividend payable on the shares (if they are the underlying asset) or on the shares that make up the index. This "dividend" will be netted off against the deposit. The derivatives broker who is the other party to the contract may also debit the account with a sum equivalent to the interest the investor would have to pay had he or she borrowed commercially to buy the shares. Thus an investor taking a long position on shares worth £100,000, and putting down a deposit of £20,000, will have to pay "interest" calculated on either the gross value of the position (£100,000) or the net value (£80,000), depending on the precise details of the contract. Retail contracts for differences enable investors to have the returns that would arise from holding shares without having to pay the full price for the shares (and without paying the dealing costs such as stamp duty reserve tax). An investor who "goes long" on shares has returns equivalent to those he or she would receive on a holding of the shares in question. An investor who goes short is producing the same results as if they were to enter into a contract to sell, at a future date, shares that they did not own, in the hope that the price would fall before completion of the sale, so that they could buy the shares that they had to deliver at a price lower than the agreed sale price. This means that the investor who takes a short position will be: credited with a payment equivalent to the "interest" they would receive had they sold shares and deposited the cash (the rate at which interest is credited on short positions is generally lower than that at which interest in charged on long positions), and debited with an amount representing the dividends they would forego by parting with the shares. Payments equivalent to interest that the investor makes or receives are not true interest. Similarly, no true dividends change hands. The amounts are instead entered into the capital gains computation. The investor should not show amounts received as investment income (interest or company dividends) on his or her return. And "interest" or "dividends" paid cannot be netted off against income. The final element that enters the computation is commission, which most brokers charge on contracts for differences. Retail contracts for differences are financial futures, and, unless the profits are taxable as trading income, in almost every case TCGA92/S143 charges the outcomes under the capital gains regime (CG56000+). SP03/02 gives guidance on when profits or losses are to be regarded as trading income. All debits and credits to the account, including commission and sums equivalent to interest and dividends, are brought within the computation of the net chargeable gain or allowable loss when the contract is closed out
gengulphus: I declared cgt share losses with HMRC in 2004/05 and have still to claim these. I anticipate making a profit in excess of the CGT allowance this year. Am I able to offset my prior losses from 2004/05? or is there a time limit to offset these? "Claiming" capital losses just means declaring them to HMRC, either in a tax return or in a stand-alone letter. So as long as you mean that and not for instance happening to mention the losses during a phone call, you have claimed them. Once losses have been claimed, there's no time limit on using them: they hang around until used or until your death cancels everything to do with your CGT. Note though that it's not your choice whether you use them: they get used when the CGT rules say they get used, even if you would prefer them not to be used. That means: * In the tax year in which the losses were realised (i.e. 2004/2005 in your case), they get used against gains realised in the same tax year if at all possible, and only start to be carried forward if there are no more same-year gains that you can use them against. (So normally, you only start to carry losses forward if you realise more losses than gains in a tax year.) * Losses that have been brought forward from earlier tax years get used against gains realised in a tax year if, after using any losses realised in that tax year (i.e. in accordance with the last bullet), the gains are above the CGT allowance for that tax year. If that happens, enough brought-forward losses are used to reduce the gains to the CGT allowance, or all the brought-forward losses are used if there aren't enough to reduce the gains to the CGT allowance. In the tax years before the 2008 CGT simplifications (i.e. the tax years 2005/2006, 2006/2007 and 2007/2008 in your case), that reduction of gains by brought-forward losses happened before applying taper relief. That could lead to losses having to be wasted offsetting gains when taper relief would have taken the gains below the CGT allowance anyway. Since the 2008 CGT simplifications, taper relief no longer exists and so that can no longer happen. So it's not completely automatic that losses realised in 2004/2005 and claimed within the time limit can be used now; they could potentially have been forced to be used in 2004/2005 or (less likely but possible) some of the tax years between then and now. But as long as they weren't, they're still around to be used - and indeed must be used if your net realised gains for the current tax year turn out to be above the CGT allowance, either to the extent of reducing those net realised gains to the CGT allowance or completely. Gengulphus
gengulphus: Investoree, So if I understand you correctly: * You currently have net realised capital gains outside the ISA that are within your CGT allowance - i.e. you're currently basically in the right CGT situation for the current tax year. * Selling the PVCS holding you have outside the ISA will realise a big capital loss, which would substantially reduce those net realised gains or even turn them into net realised losses, worsening your CGT situation for the current tax year significantly. * You have other shares outside the ISA with big unrealised gains on them, that you could sell to realise those gains. Selling the right amount of them would cancel out the PVCS losses and so would restore your CGT situation to about what it was - but you don't want to sell those shares. Is that correct? If not, then ignore the rest of this post and say how it's incorrect, please. If it's correct, then: * First off, you're not forced to do any of the selling. The apportionment calculation I described sounds messy, I know, but it isn't that difficult. The main problem with it is just that the exact share price to use in it is the price at the end of November 27th, which of course isn't yet known. * Going down from net realised gains just within the CGT allowance to much lower ones or even net realised losses costs you a maximum of the higher CGT rate (28%) times the CGT allowance (£10,900), or £3,052, in future CGT. It doesn't cost you anything immediately - and it may be that you can postpone that cost for quite a long while by good CGT planning (or even forever - if you postpone it until your death, the potential future CGT goes away completely). I realise of course that £3,052 is quite a lot of money, but given that your earlier post talked about a £50k loss and that your gains and losses are big enough to make CGT planning an issue, it's clearly not that large a sum compared with the amounts of money you're working with... At which point, I'll bring out the old saying "Don't let the tax tail wag the investment dog!". Try to get rid of the tax problem, yes, but keep it in proportion - so don't regard the tax problem as forcing you to do things you have good investment reasons not to want to do. * On the sale of the PVCS shares outside the ISA, taking the capital option will reduce the loss significantly compared with selling them entirely. E.g. suppose you have 65k shares bought 5 years ago at 100p each, and you sell them all at the current share price of 13.88p. Ignoring trading costs for the sake of simplicity, that realises a loss of 65k * (100p - 13.88p) = £55,978. If you instead keep the shares, then assuming the current share price remains essentially unchanged, your holding is worth 65k * 13.88p = £9,022 until overnight between the 26th and the 27th, at which point it becomes a holding of 65k B shares, worth 65k * 7.25p = £4,712.50, and a holding of 25k Ordinary shares, worth the remaining £9,022 - £4,712.50 = £4,309.50 (*). If the price then continues to be essentially unchanged throughout the 27th, the base cost of the original shares will then be split in proportion - i.e. £4,712.50/(£4,712.50+£4,309.50) = about 52.23% of the base cost goes into the B shares and £4,309.50/(£4,712.50+£4,309.50) = about 47.77% of the base cost goes into the new Ordinary shares. Or more precisely, the £65,000.00 original base cost splits into £33,951.73 for the B shares and £31,048.27 for the new Ordinary shares. The redemption of the B shares for £4,712.50 then realises a loss of £33,951.73 - £4,712.50 = £29,239.23 - not much more than half the loss realised by a complete sale (and in fact, the proportion is the same 52.23% as applied to the split of the base cost). Of course, it's very unlikely the share price will remain essentially unchanged over the next few days, so don't treat those figures as precise. But you can reasonably safely reckon you can nearly halve the unwanted loss by taking the capital option, compared with selling the shares. (The income option will produce £4,712.50 more income than the capital option, and a loss that is £4,712.50 bigger - both undesirable in your situation, so we can dismiss that one. With the proviso that the income option might give you the chance to realise the loss next tax year rather than this one - but I wouldn't bet on it, and it won't be under your control.) As reducing the loss will make finding compensating gains easier, I think it's well worth getting your head around the calculation. So in your position, I would take the capital option, wait after November 27th so that I can work out what the loss is, and then look for compensating gains. * On realising compensating gains, don't forget that there are ways to do it without ceasing to own the shares for any significant length of time. If you're married or have a civil partner, you sell the shares and your spouse or civil partner buys them at the same time. Otherwise, you sell the shares outside your ISA and buy them inside at the same time; if you don't have enough cash inside the ISA and cannot put it there with a subscription to the ISA, you do the reverse with a different share. Do make certain that the trading costs are small compared with the potential CGT savings, though! For such manoeuvres, you generally want shares that have experienced large percentage gains (or losses if you are doing it to realise losses, in other circumstances) and that have a small spread. Gengulphus (*) Which implies the share price rises to 17.238p overnight between the 26th and 27th. That's quite a noticeable rise compared with 13.88p, which may seem at odds with the consolidation being aimed at keeping share price parity - the reason is that a consolidation ratio aimed at keeping share price parity at one particular price will amplify any price movement away from that price, and in the case of PVCS, the share price has risen significantly since the consolidation ratio was set.
gengulphus: As MIATA says, no difference within an ISA - the ISA gets all the cash the company pays out and doesn't pay or get back any Income Tax or CGT either way. (The 10% tax credit is notional - in particular, it doesn't represent cash the company pays out as part of the scheme and an ISA cannot use it at all.) Outside an ISA: The decision in respect of losses outside my ISA seem quite simple and that it is beneficial to take the B shares for a capital return as receiving a substantial dividend payment will push me well inside the higher rate tax bracket (especially with the reducing personal allowance. Not certain what you mean by "the reducing personal allowance" - the personal allowance has been increasing. It's the basic-rate band that has been reducing. More importantly, if you're a basic-rate taxpayer, you can escape Income Tax on taking the income option until you get to the higher-rate threshold. After that, you will have tax to pay equal to 25% of the additional cash received as income, at least until you get up to the £100k income point where the personal allowance starts to be withdrawn. CGT is more complex on such schemes. Your base cost for the old Ordinary shares has to be apportioned between the new Ordinary shares and the B/C shares you get from the scheme. This is done according to their relative values at the end of the first trading day after the splitting off of the B/C shares and the consolidation of the Ordinary shares happens - that trading day is November 27th for PVCS's scheme. You value your reduced holding of Ordinary shares at the end of that day (there's a somewhat messy way of determining the share price to use in that is strictly correct, but I've seen quite a few things saying that the closing price as published in the following day's FT is acceptable), and you value your holdings of B and C shares at 7.25p each (I assume the 7.27p in your post is a typo). If those three values are O, B and C respectively, then a fraction O/(O+B+C) of the base cost goes to the new Ordinary shares, a fraction B/(O+B+C) to the B shares, and a fraction C/(O+B+C) to the C shares. Then: * the part of the base cost that goes to the new Ordinary shares is the base cost you use for any CGT calculations produced by subsequent dealing in new Ordinary shares; * the part of the base cost that goes to the B shares gets used in calculating the capital gain or loss when they are redeemed - i.e. that gain or loss is the 7.25p/share times the number of B shares, minus that part of the base cost; * the part of the base cost that goes to the C shares is inherited by the Deferred shares when the C shares pay their 7.25p/share dividend. As the Deferred shares have no value, that means you will eventually realise a capital loss of that part of the base cost. The timing of that loss will be either when the company compulsorily redeems them, which it is entitled to do for 1 penny for the whole lot of them (not each), or when you put in a negligible value claim for them, whichever happens earlier. The point of saying all that is that there are always CGT consequences of such schemes - a gain or loss (depending on how large your base cost is) if you take the capital option, a loss (which might happen in a selectable tax year if the company delays redeeming the Deferred shares until after this tax year's end) if you take the income option. So to work out which option is best generally involves working out the CGT consequences of the capital option, and both the Income Tax and the CGT consequences of the income option, and seeing which comes out better. For instance, it can happen that the income option works out better for a higher-rate taxpayer, if they have large capital gains that they want to reduce. By choosing the income option instead of the capital option, they make themselves liable to pay 25% of the 7.25p/share payout as Income Tax, but their net capital gains end up lower by the amount of that dividend. As long as that reduction still leaves their net capital gains at or above the CGT allowance, that saves them CGT equal to 28% of the payout - so by taking the income option rather than the capital option, they make a net saving in tax paid of 3% of the payout. Not saying that your decision to go for the capital option isn't right, by the way - I cannot say for certain either way, as it depends on your CGT situation. All I can say is that it might not be as straightforward as you think it is... Gengulphus
gengulphus: Edit: Some parts of this post turn out to be a bit misleading about the actual Vodafone scheme, due to its detailed timing. For example, the estimated 1/2, 1/7th, 5/14ths split of the base cost would only have been a reasonable estimate for the capital option, not the income option. For details of the precise effects of the timing, see . harvester, HMRC can question business arrangements which are purely designed to avoid tax . The deferred Vodafone share scheme looks a bit like an articial arrangement which could fall foul under that general tax provision ??? As MIATA says, B share schemes to give the investor the choice of income or capital treatment taxwise are standard stuff and well-established as accepted by the taxman - I must have experienced ten or more of them since I took up direct investment in shares seriously in 1999. Their shareholder circulars do have a standard warning about such a potential problem, but it only applies to corporate shareholders. For instance, Soco International is also doing one at present: its shareholder circular is downloadable from and says on page 36: "A disposal of the Deferred Shares will be treated in the same way as outlined in paragraph 3 of Section 1 of this Part VIII and may result in a Shareholder realising a capital loss. However, whilst the Company does not expect it to apply, Shareholders liable to corporation tax should be aware of section 31 of the Taxation of Chargeable Gains Act 1992. This section can in certain circumstances apply to capital transactions which may result in the consideration, if any, actually received on a disposal of shares being increased by such amount as is just and reasonable having regard to any previous transaction which has reduced the value of those shares. Shareholders that are liable to corporation tax and own 10 per cent. or more of the C Shares should also note that it is possible that sections 176 and 177 of the Taxation of Chargeable Gains Act 1992 could be regarded as being applicable to such a Shareholder on a disposal of the Deferred Shares. Such shareholders are urged to consult an appropriate professional adviser." So anyone holding their shares via a company might need to take a bit of care (which I won't be able to help with - I'm not knowledgable about the details of company taxation). But for those who own their shares personally, it's well-established that the basic income vs capital treatment choice in a B share scheme works. I must admit though that the point you raise is one of the reasons I was very cautious about the treatment of the VC shares under the income option for Vodafone's scheme. A B share scheme handing out shares as well as cash is new ground for me and so I'm not familiar with what warnings there might be about uncertainty of tax treatment for such B share schemes. RAMILLAR, I think you are saying that if one takes the CGT option as in their statement, there is an immediate gain on the cash component and perhaps the Verizon shares if higher than at time of settlement. Or am I talking nonsense?! Yes, under the capital option an immediate gain will be realised on the cash component - or to be precise, an immediate gain or loss, as someone who bought back in say early 2000 is likely to find the part of the base cost apportioned to the cash component is larger than the cash component... As regards the VC shares, no, I'm reasonably certain (with the same caveat as in my previous post) that no capital gain will be realised at the time of settlement. They would be apportioned a part of the base cost during the process, and if and when the VC shares were subsequently disposed of, the gain or loss would be calculated as usual as disposal proceeds minus costs (which would normally just be that portion of the base cost and the incidental costs of disposal). Of course, for anyone who uses the dealing facility mentioned in the announcement, that subsequent disposal and the resulting gain or loss may well happen at just about the same time as everything else. But using it is not obligatory, and might well be a bad idea if e.g. someone has used up their 2013/2014 CGT allowance but expects to be able to absorb the gain in their 2014/2015 allowance. To me, the chief curiosity is that after supposedly gaining, one finds that you only have half (if a 1 for 2 split)of your Voda shares, ie a fairly large capital write-down. No, you don't. On that assumption, the remaining Vodafone Ordinary share holding will indeed have about half the value that it did, and the way that is expected to happen is by you having half the number of shares at about the current price (whereas without the consolidation, it would still happen, but by having the current number of shares at about half the current price). But on that assumption, the apportionment of the original base cost will also assign half each to the holdings of Ordinary shares and B shares. So both the base cost and the current value of your Ordinary share holding will be halved, meaning that your unrealised gain on it will be halved. In essence, under the capital option what the apportionments do is spread the unrealised gain (or loss) out among the cash and the holdings of VC shares and Vodafone Ordinary shares in proportion to their values. Very roughly, we expect about half of the value to go to each of the Ordinary shares and the B shares, and then (assuming Verizon don't make use of an option they have to increase the cash and reduce the VC shares) about 2/7ths of the B share part to go into cash and 5/7ths into the VC shares. So overall, 1/2 of the value and unrealised gain (or loss) into the remaining Vodafone shares, 1/7th into the cash and 5/14ths into the VC shares. You're forced to realise the 1/7th that goes into the cash, the other two parts you have the usual choice whether to realise by selling or keep them unrealised by continuing to hold. All of that is very rough and depends on the values at the time. Or to be more precise, the values at the times, plural. That's because the directors decide the consolidation ratio they will put to shareholders in the shareholder circular according to the latest share values they have at that time, but the apportionments are determined by the share values at the time the scheme comes into effect, which will be some weeks later because the shareholder meetings need to happen inbetween, with sufficient notice given. If big share price changes were to happen between those two times, the way the apportionments split up the unrealised gains between cash, Vodafone shares and VC shares could end up significantly different from their relative values. So don't take what I say above as more than a rough indicator of what can be expected to happen... This must rank as one of the most complicated deals ever - all because of course Verizon could never find $130 billion and pay in all cash!! I've seen a few that rivalled it for CGT complexity in the past - Six Continents returning cash, consolidating its shares, and demerging into Intercontinental Hotels and Mitchells & Butlers all at once in 2003; United Utilities' two-stage rights issue over 2003-2005; Anglo American demerging two different classes of Mondi shares in 2007. I suspect even worse ones are possible! Gengulphus
gengulphus: 1 Is it possible to give one's spouse £10600 worth of shares from a trading account? How does this work? Do you simply sell shares to that value and then transfer the cash and then buy back the shares in her account? Is this transfer neutral in terms of CGT? As david77 says, get the broker to transfer the shares from your account to your wife's account. That's very easy and straightforward if the two accounts are with the same broker, but can also be done if they are with different brokers. Details of how to do it are broker-dependent, so talk to the broker(s) about how to do it. The point of doing it as a gift (i.e. nothing taken or expected in return) is that transfers that are gifts between living individuals are exempt from stamp duty. To make full use of your spouse's CGT allowance, the gift should not be of £10,600 of shares, but of shares on which you have currently got a gain of £10,600. For instance, if the shares you give have tripled in price since you bought them, you want to give your spouse shares that you originally bought for £5,300 and that are now worth £15,900. The method works because of a special rule about inter-spouse transfers: regardless of what (if anything) the transferee pays the transferor for them, the CGT computation is done as though the transferee had paid the transferor the transferor's allowable costs. That means that the transferor disposes of the shares on the date of the transferor, for a gain/loss of his or her allowable costs minus his or her allowable costs, i.e. neither a gain nor a loss, and the transferee is subsequently treated as having acquired them for the transferor's allowable costs on the date of the transfer. So the one point I disagree with in david77's reply is the "original buy date and price" - it should be "transfer date and original buy price". (Back in the days of taper relief, it used to be that both the original buy date and the transfer date were relevant - the original buy date for taper relief purposes and the transfer date for buy/sell matching purposes - which could lead to some very messy situations! Fortunately, the relevance of the original buy date disappeared along with taper relief in April 2008, and now only the transfer date is relevant to the transferee.) Make the gift by a share transfer, not by selling the shares and giving the cash: the latter means that you realise the gain or loss yourself before the cash is transferred, rather than effectively transferring it along with the shares to your spouse. Note that the gain or loss realised by your spouse is determined by the share price when your spouse sells them, not by the share price when they were transferred. So don't expect to be able to determine the perfect number of shares to transfer - just get something close, and if the price rises so that the gain is more than the CGT allowance, either sell somewhat fewer than all the shares to realise a lower gain, or accept paying a little bit of CGT on the excess gain. Also note that because the gain is realised when your spouse sells, it's not enough to get the transfer done this tax year, you've also got to get your spouse's sale done this tax year. For the possible benefit of anyone else reading this: the special rule that makes all this work applies to civil partners as well as spouses. It does not apply in cases of legal separation, even when the spouses are not divorced and so still legally married (or the equivalent status for civil partners - I'm afraid I've forgotten the exact terminology). It also does not apply to 'partners' who are not in a legal marriage or civil partnership, no matter how long-established and secure their relationship. (Edit: for anyone confused by that last statement and MIATA's reply to Pedr01's question, the gift holdover relief described in the Helpsheet MIATA linked to is a different special rule to the one that applies to spouses and civil partners. It has a similar overall effect, though achieved in a somewhat different way technically, and it mainly depends on what the gift is rater than who it is given to. For gifts of shares, the shares have got to be shares in a trading company that counts as unlisted - and yes, that means that if AIM shares are made ISA-eligible by the simple technique of making them all count as listed, none of them will be eligible for gift holdover relief any longer...) 2 If over the course of a year, one made say 20 share transactions, is it the case that it is simply the overall profit that cannot exceed £10600 without incurring CGT? Yes in all normal circumstances. But beware: there are cases when the overall profit doesn't exceed £10,600 and you've still got to account for CGT to the taxman. That accounting will produce an answer of £0 CGT owing, but it's still got to be done. The main cases where that happens are: A) If you want to make some CGT-related claim or election, because if you don't actually make the claim or election, you don't get it! B) If the gains you've made on your profitable transactions are over £10,600 and need the losses on the loss-making transactions to bring the overall profit back below £10,600. This is really a special case of A) above, because there's a rule that the losses cannot be offset against the gains unless the losses have been claimed - so you need to make claims to get your CGT bill down to £0. C) If the total "disposal proceeds" of your sales and other disposals are above £42,400 (four times the CGT allowance). The disposal proceeds of a sale are the raw price paid for the shares (or other asset) before deducting any selling expenses. For example, if you sell 1,000 shares at 200p each, paying your broker a £10 commission, the disposal proceeds are £2,000, not £1,990. The disposal proceeds of other disposals are determined similarly - for instance, on a gift transfer to your wife, your disposal proceeds are the total of your allowable costs. If you're asked to fill in a tax return, you have to account for CGT in it in any of those three cases (and a couple of other ones relating to non-domicile that I cannot remember offhand) because the instructions for filling in a tax return say you do. If you're not asked to fill in a tax return, you need to communicate with the taxman to tell him the situation in cases A) and B) for the reasons explained in those cases - and he will probably respond by asking you to fill in a tax return. In case C), however, I'm not aware of any reason why you need to communicate with the taxman about your CGT unless he asks you to fill in a tax return or one of the other cases also applies. Finally, I say "in all normal circumstances" in the first paragraph of this section of the reply because there are some cases where a loss becomes 'clogged', meaning that it is only allowed to be used against some specific types of gain. The standard example is if you realise a loss on a disposal of an asset to a 'connected person' such as a close family member or a business partner: such losses can only be used against gains realised on disposals to the same connected person. If your overall gain is made up of £15k gains and £5k losses, so is £10k and under the CGT allowance, you normally offset the £5k losses against the £15k gains, leaving you with gains below the CGT allowance and so no CGT to pay. But if the £5k losses are 'clogged' and cannot be offset against any of the £15k gains, the CGT allowance only deals with £10,600 of those £15k gains, leaving you with CGT to pay on £4,400 of gains. So it is possible to end up with CGT to pay on overall profits under the CGT allowance - but it's distinctly unusual and requires special circumstances. 3 When will the 2013/14 CGT allowance be known and also the 2013/14 ISA allowance? If the normal pattern is followed, I believe the 2013/2014 CGT allowance will be announced in the Budget later this month. If it rises in line with CPI as it is normally supposed to, the estimated figure I have seen is £11,000 - but I wouldn't be surprised if the Budget overruled that to freeze it at £10,600 again. The 2013/2014 ISA allowance is already known to be £11,520 - see . It could presumably still be changed at the last minute in the Budget, but I wouldn't expect it to be. Gengulphus
gengulphus: bobdobalina, Each of you has a £10,600 CGT allowance this tax year - i.e. each of you can make that big an overall capital profit this tax year without any CGT being payable. If you make more than that, you will be taxed on the excess over the allowance. The rate at which each of you is taxed depends on their Income Tax situation. Your wife's earnings of £140 per week is a bit over £7,000 per year, and she has an Income Tax personal allowance of £8,105 this tax year (assuming she is under 65 - it's more if she is 65 or more). If her taxable income (i.e. not just earnings, but also interest, dividends, etc, excluding untaxable stuff like interest on cash ISAs) is also below her personal allowance, then she can get up to £34,370 worth of capital profits in excess of the CGT allowance taxed at 18%, then any further profits beyond that are taxed at 28%. That figure of £34,370 is her completely-unused Income Tax basic-rate band. If her taxable income is above the £8,105 personal allowance, it gets reduced on a pound-for-pound basis. For example, if her taxable income were £9,000, then she would use £9,000 - £8,105 = £895 of her basic-rate band on income, and so she would only be able to get £34,370 - £895 = £33,475 of capital gains in excess of the CGT allowance taxed at 18% before moving on to 28%. If her taxable income is below the £8,105 personal allowance, by the way, the unused part of her personal allowance cannot be used to save her CGT in any way. All of those rules also apply to you, but I assume from the fact that you don't also say that your income is low that the amount of excess capital gains you can get taxed at 18% rather than 28% is lower, or even zero if you're a higher-rate taxpayer and so don't have any unused basic-rate band. So in the absence of the further measures I'll describe below and assuming your wife's taxable income is below her personal allowance or not much above it, the best you could do on a sale this tax year that produced a gain of £50,000 would be to keep £10,600/£50,000 = 21.2% of the shares yourself and transfer the remaining 78.8% of them to your wife, then each of you sell. (The order is important: when you sell, the capital gain becomes 'attached' to the owner of the shares at the time (or half to each of you if they're in a joint account when sold) and cannot afterwards be transferred between you.) That would result in you having a £10,600 gain, covered completely by your CGT allowance, and your wife having a £39,400 gain, of which £28,800 would be in excess of her CGT allowance. That excess capital gain would be within her unused basic-rate band, so would all be taxed at 18%, resulting in a CGT bill of 18% * £28,800 = £5,184 for her. Now for the further measures. The most obvious one is that if you can split the sale between tax years and are willing to take the risk of the share price falling, you can each use both this year's allowance and next year's. E.g. if the 2013/2014 tax year's CGT allowance and rates are the same as this year's (which I don't think is known yet), you could transfer enough shares to your wife now for her to sell for a £10,600 gain and sell the same number yourself, and both gains would be within the CGT allowance, so no CGT bills for this tax year. Then on or after April 6th, you could keep enough shares to realise another £10,600 gain yourself, while transferring the rest to your wife for her to sell. If the share price were unchanged by that point, you would still end up making £50,000 gains, but four lots of £10,600 gains would be untaxed, and so your wife would end up paying 18% on only the remaining £7,600 of capital gains, for a £1,368 CGT bill. (Or you could even wait a further year to sell the shares that produce that last £7,600 of capital gains, which would make the 2014/2015 tax year's CGT allowances usable as well and so eliminate the CGT bill entirely - unless of course the share price rises steeply and so increases the gain further, but having to pay CGT because of that would beva very nice problem to have!) The other thing to mention is other capital gains and losses. If you've already made other capital gains this tax year, they'll increase the amount of capital gains you have to deal with, and similarly, if you've already made capital losses this tax year, they'll decrease the amount of capital gains you have to deal with. Again, that applies equally to any gains or losses your wife has already made this tax year - and as with already-realised gains, you cannot transfer already-realised losses between you. You might also have the opportunity to make further gains and losses this tax year. Making further gains is not going to help your CGT situation, so avoid doing so unless there is a good investment case for doing so (but if there is such a case, sell snd pay the extra CGT: there's an old saying "never let the tax tail wag the investment dog" for such situations!). But making further losses could be very helpful - for example, if you happen to have a Lloyds holding bought several years back for £5,000 and it's now worth £500, then selling it for a £4,500 loss would allow you to transfer fewer shares to your wife and make a £4,500 greater gain (i.e. £15,100 rather than £10,600) yourself. That would reduce the gain made by your wife by £4,500, which would reduce her CGT bill by 18% * £4,500 = £810 - unless of course it had already been reduced to zero by being split over three tax years. You might also be able to use losses made in past tax years and carried forward to the current tax year. That will be the case for a past tax year if all of the following three conditions are true: * The first condition is that you made more losses than gains in that tax year - if so, the excess of the losses over the gains can be carried forward. That's because losses have to be used against gains made in the same tax year if at all possible: the only way for losses to start being carried forward is if they cannot be used against any gain - and the only normal way that happens is if the gains have all been used up. * The second ondition is that you 'claim' the losses by telling the taxman about them within a time limit. That time limit is now the end of the 4th tax year after the tax year in which you made the losses, so if you made the losses before the 2008/2009 tax year, you're now out of luck (unless they were made much earlier - there's a cut-off date in the 1990s before which this rule about 'claiming' the losses doesn't apply). And if you made the losses in the 2008/2009 tax year, get your skates on: you only have until April 5th to tell the taxman about them. I should say that I'm assuming you haven't already 'claimed' the losses. If you have, then as long as it was done within the time limit for the tax year concerned, they'll then remain available for use until actually used. * The third condition is that the carried-forward losses haven't already been used up by an intermediate tax year. Using them up will only happen if the gains for that tax year were in excess of the losses for that tax year plus the CGT allowance for that tax year, and only to the extent of that excess. If all three of those conditions are the case, you will probably be able to use the carried-forward losses. Otherwise, don't bother! Finally, just in case of any bright ideas about having other family members you could transfer shares to and get to sell the shares using their CGT allowances: as a general rule, that doesn't work, because the technique relies on a special rule for transfers between spouses and civil partners. If you try it with others, the transfer itself makes you liable to CGT. There is however another special rule that has a similar effect, called gift holdover relief. It only works on gifts - i.e. you mustn't be expecting anything in return - and it only works on 'unlisted' shares in trading companies (i.e. not investment companies, property companies, etc). Quite a few AIM shares qualify for it, because being on AIM doesn't make a share count as 'listed' - but if the company is also on another stock exchange, that might well make it count as 'listed'. So a somewhat tricky one to use, and having to be a gift might well make it of no interest anyway, but it seems worth mentioning. If it is of interest, see for details. Gengulphus
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