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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
  15.00 0.31% 4,825.00 39,561 16:35:18
Bid Price Offer Price High Price Low Price Open Price
4,825.00 4,830.00 4,865.00 4,800.00 4,800.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 7.78 6.37 59.12 81.6 656
Last Trade Time Trade Type Trade Size Trade Price Currency
16:35:18 UT 69 4,825.00 GBX

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DateSubject
17/4/2021
09:20
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 4,810p.
Capital Gearing Trust Plc has a 4 week average price of 4,660p and a 12 week average price of 4,560p.
The 1 year high share price is 4,960p while the 1 year low share price is currently 4,185p.
There are currently 13,603,863 shares in issue and the average daily traded volume is 47,688 shares. The market capitalisation of Capital Gearing Trust Plc is £656,386,389.75.
23/3/2021
17:56
gengulphus: Constable Ken, If my income is below my personal allowance of £12,500, does this in effect increase my CGT allowance? Sorry, but the answer is no. Personal allowance that hasn't been used on income cannot be used against CGT, just as CGT allowance that hasn't been used on capital gains cannot be used against Income Tax. Gengulphus
18/3/2021
09:15
constable ken: It's a long time since I got anywhere near liability for CGT, and I've forgotten most of what I used to know, but due to some badly-timed takeovers my run of luck may be nearing its end. If my income is below my personal allowance of £12,500, does this in effect increase my CGT allowance? Say I have income of £10,000 and gains of £15,000. Is my CGT bill 10% of £15,000 gains minus £12,300 CGT allowance =£270? Or is it 10% of £15,000 gains minus £2,500 unused personal allowance minus £12,300 CGT allowance =£20?
21/2/2021
12:57
gengulphus: s2lowner1, Moving on to: 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 and: 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. My view is that a CGT event happens when you sell, and that you need to keep the documentary evidence for all the inputs to the gain/loss computation for that CGT event until enough time has gone by since the sale. So I would keep all documentary evidence about open positions indefinitely, and about closed positions until enough years have gone by since they were closed. I'm not certain how many years is enough, but the largest number I've seen mentioned is troutisout's 7 years. I do realise that where paper records are concerned, that can result in quite bulky records - I've got records myself that in the case of one open position go back about 37 years! Fortunately, they're not accumulating at anything like the rate they once were, as most stuff is done electronically these days. And I think one could make a good case for scanning one's old paper records and any new ones that do arrive, which allows all the records to be held electronically and in a consistent filing system. Then the paper originals just get put in a box labelled with the tax year and stashed away somewhere out of the way, and then destroyed say 7 years later. And the electronic copies are much less bulky... The main problem is that if one accumulated a lot of paper records before share investing became mainly electronic (or has been reluctant to be a guinea pig for new systems, preferring to let them bed in for a number of years), quite a lot of scanning can be required... Gengulphus
21/2/2021
12:18
gengulphus: s2lowner1, 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 The whole business of reporting and using losses is a bit complex, and I can't really tell from what you say whether you've understood it correctly or not. So I'd better lay it out as best I can: * A taxable gain or loss (neither gains and losses made inside ISAs and SIPPs are taxable) is 'realised' on a specific date - normally the date on which you sell the shares or otherwise transfer them to someone else's possession (e.g. as a gift), though there are a few other ways of determining the date (e.g. the date you name within a negligible value claim). You fix it at the time you sell (or give them away, make the negligible value claim, etc) and that is the date on which they enter your CGT affairs. * You 'claim' a loss by declaring its details to the taxman during the tax year during which it is realised or one of the following 4 tax years. If you don't claim it in that time period, it becomes forever unusable. Exceptions: Losses realised in the 1995/1996 tax year or before have no time limit on when they can be claimed. Also, if I remember correctly, losses realised in tax years between 1996/1997 and 2003/2004 could be claimed up to the January 31st about 5 years and 10 months after the end of the tax year in which they were realised, and losses realised in the 2004/2005 tax year could be claimed up to the end of the 2009/2010 tax year. It's not guaranteed that I've remembered those past details correctly - but I'm not going to try to look them up because all they affect is the validity of loss 'claims' made in the past. As far as the present situation is concerned, losses realised in the 1995/1996 tax year or before can be claimed; losses realised in the tax years from 1996/1997 to 2015/2016 cannot be claimed; losses realised in the 2016/2017 tax year through to the 2020/2021 tax year can be claimed (though there's only about six weeks left in which losses realised in the 2016/2017 tax year can be claimed - on April 6th, they cease to be claimable). * It is important to understand that while you can delay claiming a loss, that doesn't alter the date that it is realised and enters your CGT affairs. E.g. if you realised a loss in the 2016/2017 tax year and only claim it now, it's not automatically usable in a 2019/2020 tax return that you're submitting now: basically, you first need to revisit your 2016/2017 tax return. Then if that revisit changes the losses you carry forward into 2017/2018, you need to revisit your 2017/2018 tax return. Then if that second tax return revisit changes the losses you carry forward into 2018/2019, you need to revisit your 2018/2019 tax return. Then if that third tax return revisit changes the losses you carry forward into 2019/2020, it actually affects the tax return you're submitting now. In particular, if the loss realised in 2016/2017 would have been completely used up against gains realised in 2016/2017 and those gains were covered by your 2016/2017 CGT allowance anyway, then none of them get carried forward to any of the later tax years, and so the loss doesn't affect the tax return you're submitting now. * The normal way to claim a loss is in the tax return for the year in which it was realised, and of course you normally prepare and submit that tax return in the year following the year in which it was realised. If you're required to fill in that tax return and to include its capital gains section and computations, then that section and computations are covered by your declaration that the tax return is complete and correct to the best of your knowledge and belief. I.e. if you're obliged to fill in a tax return including capital gains details, then deliberately failing to claim a loss realised in the tax year concerned involves making a false declaration - which is something you can get into trouble for. Of course, it's possible to make an inadvertent mistake - but if you do and it comes to light, don't be surprised if the taxman asks you to explain how it came about. * Looked at another way, the 4-year period for claiming losses isn't really intended to be used by those who normally have to deal with CGT. It's mainly there for those who haven't had to deal with CGT before, or only very occasionally have to. * As far as how losses are used, you normally simply have to follow some fixed rules, without being able to make any choices. You start knowing the total G of the taxable gains realised in the tax year, the total L of the taxable losses realised in the tax year (excluding any that weren't claimed in time), the total B of the losses brought forward from the previous tax year, and the CGT allowance A for the tax year. The fixed rules can be summarised as "first use same-year losses, then CGT allowance, then brought-forward losses" - in precise detail, they are: 1) If L > G, then all gains are wiped out by same-year losses, and you have surplus same-year losses of L-G. You carry those surplus same-year losses forward into the next tax year, along with all brought-forward losses. So you have no taxable net gains to be taxed, and the losses carried forward into the next tax year are B+L-G. 2) Otherwise, all the same-year losses are used up reducing your net gains to G-L. If they're within the CGT allowance, i.e. if G-L <= A, then the CGT allowance reduces them to zero, and the brought-forward losses are untouched. So you are left with no taxable net gains to be taxed, and the losses carried forward into the next tax year are just B. 3) Otherwise, the CGT allowance is also all used up, reducing your net gains to G-L-A, which is still positive. If they're less than or equal to the brought-forward losses, i.e. if G-L-A <= B, then enough of the brought-forward losses are used up to reduce them to zero. So you are left with no taxable net gains to be taxed, and the losses carried forward into the next tax year are B-(G-L-A). 4) Otherwise, the brought-forward losses are also all used up, and you still have net gains. So you have G-L-A-B taxable net gains to be taxed, and the losses carried forward into the next tax year are zero. * I said "normally" above because there are some unusual cases (such as 'clogged losses') where a loss can be used, but only in certain ways. In those cases, you might get a choice about whether you consider using those losses before or after other losses which ends up affecting which losses get used and which don't. But I don't know any details about that - not even whether you actually get such a choice - so this is basically just to say that I cannot say that people never get any choice about how to use losses, just that they normally don't. Gengulphus
23/9/2020
19:00
gengulphus: 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
15/7/2020
18:31
gengulphus: azalea, If I do not exceed my annual Capital Gains tax allowance, do I still have to declare to HMRC the number of shares I have bought and sold in the tax year? If HMRC require you to fill in a tax return, the instructions for doing so are in https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874084/SA150_English_Notes.pdf - that's the version that accompanies the paper tax return because I cannot give any equivalent link for the online tax return. The rules for the two types of tax return are essentially the same, though, so it does give you the answer about whether you should fill in the capital gains part of the online tax return: "7 Capital gains summary Fill in the ‘Capital gains summary’ pages and attach your computations if: • you sold or disposed of chargeable assets which were worth more than £48,000 • your chargeable gains before taking off any losses were more than £12,000 • you want to claim an allowable capital loss or make a capital gains claim or election for the year • you were not domiciled in the UK and are claiming to pay tax on your foreign gains on the remittance basis • you’re chargeable on the remittance basis and have remitted foreign chargeable gains of an earlier year • you sold or disposed of an interest in UK land or property and were not resident in the UK or you were a UK resident and overseas during the disposal • you submitted a Real Time Transaction return on the disposal of an asset and have not paid the full amount of Capital Gains Tax" The first three of those are the important ones for most people (the next three are only important for those with complications due to foreign residence, domicile, etc, and the last is something I've never come across). Together, they mean that in order to avoid having to fill in the Capital Gains part of the tax return, the total proceeds of your sales must be at most four times the CGT allowance and the total gains of your profitable sales (i.e. without offsetting the losses of your loss-making sales) must be at most the CGT allowance. For the first of those, the proceeds of a sale are the number of shares sold times the price obtained per share, without deducting broker commission or any other incidental costs - so a bit more than the final amount credited to your account for the sale. So you can be required to fill in the Capital Gains part of a tax return even though you don't have any CGT to pay, and since filling it in also requires you to submit your CGT computations, yes, you can be required to give numbers of shares sold along with other details of the sales, as well as similar details of the purchases of those shares (which could be in either the same tax year or in previous tax years, and can even be in the following tax year in some cases where the '30 day rule' is involved). There are basically three situations in which you have no CGT to pay but have to fill in the Capital Gains part of a tax return, or want to: A) Your total proceeds from sales for a tax year exceed four times the CGT allowance but your total gains (without offsetting losses) from the profitable sales are under the CGT allowance. B) Your total gains (without offsetting losses) from the sales for a tax year are over the CGT allowance, but you have enough losses (or other claims or elections) from those sales to be able to offset them to below the CGT allowance and so pay no CGT. C) Your losses from the sales for a tax year are greater than your gains from those sales, so you can offset all the gains and still have losses remaining. In situations A) and B), you have to fill in the Capital Gains part of the tax return if you're asked to submit one. In situation C), you're not obliged to fill it in, but you probably want to, because you can carry the net losses remaining after offsetting all the gains forward to future tax years, and they will eventually save you CGT unless you die before the opportunity for them to do so arises. (I should add that the rules for using losses brought forward from earlier tax years are a bit more generous than those for losses from sales in the same tax year: they don't have to be used offsetting gains that are already under the CGT allowance.) That leaves the case that HMRC haven't required you to submit a tax return. In that case, you're not legally required to submit one immediately, but you do have to check whether you have Income Tax and/or CGT to pay for the tax year, and if so, to notify HMRC of that situation ( https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf210 ). HMRC are able to react to such a notification in various ways, but one reasonably likely one is that they'll require you to submit a tax return. In situation A), you don't have CGT to pay, so unless you have Income Tax to pay, AFAIAA you're not obliged to do anything if HMRC don't require you to submit a tax return. Situation B) is trickier. The issue is that you need to offset losses in order to have no CGT to pay, but you have to 'claim' a loss by telling HMRC about it to be able to use it to offset gains. So one way or another you need to tell HMRC the details of the losses, and it's at least reasonably likely that that will eventually lead to HMRC requiring you to submit a tax return. Situation C) is again a case of wanting to tell HMRC about the situation in order to 'claim' the losses concerned. There's a time limit on doing so: a loss that hasn't been 'claimed' by 4 years after the end of the tax year in which the sale happened can no longer be 'claimed'. So there's no immediate need to inform HMRC of the details, but there is a need to do so eventually (note that once 'claimed', there's no deadline for actually using the loss to offset gains, other than your death). Gengulphus
14/6/2020
13:48
gengulphus: jeffian, I have just had a rather unpleasant shock, although this may come as no surprise to the thread experts. My wife held shares in a family company from way before 1982. That company was taken over in 1998 for shares and cash and the acquiring company has itself now been taken over in a cash-only bid. We had constructed a spreadsheet in 1998 to establish the base cost of the shares, starting with the known March 1982 value and adjusting for various transactions - additions, disposals, Rights issues and so on - including, of course, indexation. I am aware that indexation was frozen at 1998 and removed in 2008 but, having had the calculations back from my accountant, I wasn't aware that the indexation element of the 1998 cost was actually withdrawn and the base cost for CGT purposes goes back to the cost of the original holding. This smacks of retrospective taxation, surely? This change took effect in April 2008, as part of a package of CGT simplifications that came into effect then. Basically, that package almost entirely (*) got rid of indexation and taper relief, and reduced the CGT rates from the individual's marginal Income Tax rate to the current 10% up to one's unused basic-rate Income Tax band, 20% above that (a few years later, an extra 8% was added to both of those rates if the asset is residential property, and that remains the case today). So basically, the simplifications increased gains by removing the inflation/long-holding-period increments to base cost provided by indexation and taper relief, but reduced the rates at which the gains were taxed. IIRC, the government of the time justified this with the argument that overall, the increase and the decrease roughly balanced out, so that there was little overall effect on CGT raised, and so they weren't retrospectively raising more tax... But as far as individuals are concerned, yes, those changes in 2008 acted retrospectively, and the effects were definitely not guaranteed to cancel out: typically, someone who made massive gains over a period of less than three years benefited greatly from the rate cuts and wouldn't anything to lose from the abolition of indexation and taper relief (unless they could count the asset as a 'business asset'). Whereas someone who made modest, roughly inflation-equalling gains over many years might well have had gains before 1998 cancelled out by indexation and gains after 1998 reduced to below the CGT allowance, for no CGT to pay before the changes, and have found themselves liable to CGT on a gain that exceeded the CGT allowance after it... (It does incidentally seem particularly perverse that a Labour government made tax changes that benefited speculators who got rich quick and penalised steady long-term investors!) Anyway, people did make a bit of a fuss about the retrospective-taxation aspect of the changes back then in 2007-8 when they were proposed and enacted, but they didn't get anywhere. So I'm pretty certain there's no mileage in pursuing that angle now. And as far as the shock you've received is concerned, you might be able to reduce it by looking at what your CGT bill would have been if you did still have the indexation to reduce the gains up to 1998, but had to pay CGT at your marginal Income Tax rate rather than at the 10%/20% rates. No guarantees, though: as I indicate above, that exercise produces widely varying results for different individuals. (*) There is a case in which indexation can still affect calculations of capital gains and losses - IIRC it's when an asset was transferred between spouses before the simplifications came into effect: the indexation got 'frozen' into the transferee spouse's base cost at the time of the transfer, and that doesn't get retrospectively reversed. (But if this situation does apply to anyone, just take it as an indication that you need to check the exact rules, because I am not certain I remember the treatment accurately!) Gengulphus
25/1/2020
12:20
gengulphus: Erogenous Jones, I'm sorry, but I think I have to largely pass on your question, because discretionary trusts and their taxation go well beyond my knowledge and experience. About all I can say is that if the rules for capital losses are the same as they are for individuals (which seems reasonably likely to me, but it's not something I know for a fact), then: * Gains and losses only arise (or are 'realised' in taxspeak) for CGT purposes if and when the assets are disposed of (usually by sale). So the trustees are to a large extent in control of which gains and losses arise for CGT purposes - they can prevent excessive gains or unneeded losses from arising by choosing not to sell, or cause losses needed to offset excessive gains (or enough gains to use the CGT allowance) to arise by choosing to sell. There are of course other forms of disposal that the trustees don't have a choice about, such as having a shareholding taken over or having made a fixed-term investment that matures, so they won't necessarily be able to totally control which gains and losses arise for CGT purposes - but they will generally have quite a lot of control. * When considering selling for the CGT effects, do pay attention to the old maxim that one shouldn't let the tax tail wag the investment dog - if there's a clear investment case for selling, do sell, and if there's a clear investment case for holding, don't sell, in both cases even if that means that the trust pays more CGT. But if the investment case is unclear, using the CGT effects as a tiebreaker between selling and not selling can be a reasonable idea. * Also watch out about trading costs: at 1%ish, they may seem small compared with 20% CGT, but they're a percentage of the total capital and the CGT is a percentage of the gain or loss - so if e.g. an investment is standing at a 5% loss, selling to save CGT by offsetting the loss is likely to cost about as much as it saves... * Once a loss has arisen by the asset being disposed of, one needs to tell HMRC about it (known as 'claiming' the loss) within 4 years after the end of the tax year in which it arose if one is ever to use it to offset gains. It also has to be used to offset gains that arose in the same tax year to the extent that there are such gains, even if those gains fall within the CGT allowance. Losses that arise in a tax year and are in excess of gains that arose in the same tax year can be carried forward to be used in later tax years, provided HMRC are told about them within the 4-year time limit. Note that once HMRC have been told about such a loss, it gets carried forward until it's needed because gains exceed the CGT allowance (unlike same-year losses, brought-forward losses do not have to be offset against gains below the CGT allowance), with no time limit on how long it might take. As some examples: A) Suppose that the trust realised a loss of £1,000 and no gains in the 2015/2016 tax year, and that the trust hasn't realised gains in excess of the CGT allowance since then. That loss can be carried forward through all of those tax years and will continue to be available into the future, provided HMRC are told about it (with details - i.e. what was sold, when, how much it was sold for and how much it had cost, etc) by the deadline, which is April 5th this year (four years after the end of the 2015/2016 tax year). B) Suppose that the trust realised a loss of £1,000 and a gain of £500 in the 2015/2016 tax year, and that the trust hasn't realised gains in excess of the CGT allowance since then. The first £500 of that loss has to be offset against the gain, but the remaining £500 can be carried forward through all of those tax years and will continue to be available into the future, provided HMRC are told about it (with details - i.e. what was sold, when, how much it was sold for and how much it had cost, similar details of the gain it was partially offset against, etc) by the same deadline. C) Suppose that the trust realised a loss of £1,000 and a gain of £1,500 in the 2015/2016 tax year, and that the trust hasn't realised gains in excess of the CGT allowance since then. That loss has to be offset entirely against the gain and none of it can be carried forward, and (AFAIAA) the difference between having £1,500 net gains and £500 net gains in the 2015/2016 tax year makes no difference to the fact that no CGT was payable for that tax year. So while the trustees could provide details to 'claim' the loss, there would be no point in doing so (and if the trust tax return is like the individual one, the question it asks is whether one wants to claim losses, so one can truthfully answer it "No" in such circumstances). I should end this reply (which seems to have grown longer than I anticipated!) by again stressing the fact that it's based on my knowledge of CGT as it applies to individuals, and is only relevant to CGT as it applies to trusts to the extent that the rules are the same. Whether they are the same is something I'll have to leave to you or others to determine. Gengulphus
31/8/2019
15:06
gengulphus: attrader, I have a question about CGT tax bracket. I have a company where I receive all my income in dividends and I pay dividend tax rate. For CGT, would I be classified as Basic Rate payer or High rate payer since I don’t receive any salaried income ? I cannot really answer that question as it stands, because nobody is really classified as either a basic-rate taxpayer or a higher-rate taxpayer for CGT purposes. Rather, their taxable capital gains are taxed by CGT at either the lower rates of CGT (10%, or 18% for residential property) or the higher rates (20%, or 28% for residential property), as follows: 1) Work out the total of their taxable capital gains realised during the year. 2) Deduct allowable capital losses according to the rules for doing so: first deduct ones realised during the same year as far as possible (i.e. deduct all those losses if they're less than the gains, or an amount equal to the gains if they're greater). Then if the remaining gains are above the CGT allowance and there are losses brought forward from earlier years, deduct them until either they run out or the gains are reduced to the CGT allowance. (Any losses left undeducted at the end of this are carried forward to the next year.) 3) The remaining gains are the net taxable capital gains. They are taxed as follows: * First, an amount up to the CGT allowance is not taxed. * Second, if there are gains left after the first step (i.e. the net taxable capital gains were more than the CGT allowance), an amount up to the amount of the Income Tax basic-rate band that was not used for income in the Income Tax calculation is taxed at the lower rates. * Finally, if there are still gains left after the first two steps, they are taxed at the higher rates. So the simple case (which I would guess doesn't apply to you) is that if you're a higher-rate taxpayer (or above) as seen by Income Tax, i.e. if your Income Tax calculation takes you into higher-rate tax, it will have used your entire basic-rate band, there will be nothing left for the second step to use, and so none of your net taxable capital gains will be taxed at the lower rates. I.e. up to the CGT allowance will be untaxed, and anything over that is taxed at the higher rates. But if you're a basic-rate taxpayer as seen by Income Tax, i.e. if your Income Tax calculation takes you into basic-rate tax but not into higher-rate tax, you probably didn't use all of your basic-rate band in that calculation (not quite certainly because your taxable income might be exactly equal to the higher-rate threshold, taking you all the way through the basic-rate band but not quite into higher-rate tax). Up to the CGT allowance of net taxable capital gains is untaxed and up to your amount of unused basic-rate band is taxed at the lower rates, and anything not covered by those is taxed at the higher rates. Or if you're a non-taxpayer as seen by Income Tax, i.e. if your Income Tax calculation has all of your taxable income covered by your personal allowance and any other proper Income Tax allowances you happen to have (though see below about some 'allowances' introduced in recent years) and so doesn't take you into basic-rate tax, the same applies except that all of your basic-rate band is available, not just some of it. Note that unused allowances do not count as unused basic-rate band. In particular, unused Income Tax personal allowance is completely wasted and doesn't affect the CGT calculation, just as unused CGT allowance is completely wasted and does not affect the Income Tax calculation. So basically, it's the gains that are classified as being covered by the CGT allowance, taxed at the lower rates or taxed at the higher rates, and you could well end up having some taxed at each rate. So asking how you are classified is somewhat off-target... (*) A couple of other things to say: first, the Income Tax calculation does of course look at all your taxable income - salary, interest and dividends (unless received in an ISA or other tax shelter), pensions, etc. So the amount of salaried income you receive is not enough on its own to determine how much basic-rate band your Income Tax calculation leaves unused - and the dividends you receive do count towards taxable income. "Dividend tax" is not a different thing from Income Tax - it is Income Tax, just paid at a lower rate than for most taxable income. And secondly, the so-called 'dividend allowance' is not what I called a "proper Income Tax allowance" above, in that it doesn't prevent the dividend income it covers being counted against the tax bands: it is just an especially low tax rate of 0% that applies to the dividend income it covers. I.e. 'dividend allowance' is a rather poor description of it, since it's applied in a rather different way to the personal allowance and that different way does affect how the basic-rate band is used. And other "allowances" introduced in fairly recent years may need careful looking at to see whether something similar applies to them... (*) Note that this is little different from the situation with Income Tax - higher-rate taxpayers generally have part of their income taxed at basic rate and the rest at higher rate. So it is customary to take "higher-rate taxpayer" to mean someone in that situation, and there is a convention that one describes a taxpayer according to the highest rate of Income Tax that they pay. One could have a similar convention with regard to CGT, so that one describes someone as a "higher-rate CGT payer", a "lower-rate CGT payer" or a "CGT nonpayer" according to whether they pay CGT at the higher rates (possibly accompanied by also paying it at the lower rates), and if not, whether they pay it at the lower rates. But just as what rate of Income Tax taxpayer one is normally regarded as is an output from the Income Tax calculation, not an input to it, what rate of CGT taxpayer one is by that definition is an output from the CGT calculation, not an input to it. One needs to know all the inputs to the CGT calculation to determine it, not just the facts you give! Gengulphus
07/1/2019
00:27
gengulphus: finkwot, Shares in BBY purchased in 2007 and 2008. Rights issue in 2009. Rights lapsed, payment received. Shares eventually sold in 2017. No other transactions. I was assuming I would deduct that payment from the original cost of acquisition to find the cost of acquisition to use for calculating CGT loss on the eventual sale in 2017. However I have now read this: ... The payment was in excess of £3,000 and in excess of 5% of the value, so it's not a 'small' amount. There's no mention of CGT in the notes I have for her 2010 tax return, but I'll assume that's because she was within the threshold. Does the fact that her receipt of this payment was technically treated as a part disposal of her shareholding in 2009 affect the cost of acquisition I must use today to calculate the loss on sale of the shares in 2017? Yes, the lapsed rights payment is treated as a capital distribution (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57856) and as it fails to qualify as 'small', it needs to be treated as a part disposal as described in the pages under https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57800p, especially CG57825-6. (There might be exceptions, as the end of https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57836 hints - but the wording of that page does suggest to me that the answer is likely to be "No"!) The difficulty is establishing the correct values to use for the apportionment of the base cost of the original shares between the ex-rights shares and the rights. Sometimes a company website include useful CGT-related information, possibly in a 'Shareholder information' or similarly-named section of an annual report, and you're in luck on this occasion: Balfour Beatty's 2009 annual report is available on its website, as https://www.balfourbeatty.com/media/29357/ar2009.pdf, there's a 'Shareholder information' section one page from its end, and that section includes the following information about the rights issue: Rights issue On 17 September 2009, the Company announced a fully underwritten 3 for 7 rights issue at a subscription price of 180p per new ordinary share, representing a discount of approximately 46.8% to the closing middle market price of 344p per ordinary share on 16 September 2009, after adjustment for the 2009 interim dividend, to substantially finance the acquisition of Parsons Brinckerhoff Inc. The rights issue and acquisition were approved by the holders of the Company’s ordinary shares at a general meeting on 7 October 2009 and the rights issue closed on 22 October 2009. The Company’s ordinary shares were quoted ex-rights by the London Stock Exchange on 8 October 2009 and their closing middle market price that day was 279.6p per share. The closing middle market price of an ordinary share immediately before the ex-rights date was 316p per share. Dealings in nil paid new ordinary shares commenced on 8 October 2009 and the closing middle market price of the nil paid new ordinary shares that day was 98.75p per share. The theoretical ex-rights price was 275.2p per ordinary share. The Company received valid acceptances in respect of 199,469,067 ordinary shares, representing approximately 97.06% of the total number of new ordinary shares offered to shareholders pursuant to the rights issue. In accordance with the arrangements set out in the rights issue prospectus, JPMorgan Cazenove Limited and RBS Hoare Govett Limited procured acquirers for the remaining 6,033,170 ordinary shares for which valid acceptances were not received, at a price of 287p per new ordinary share. 205,502,237 new ordinary shares were therefore issued, raising £352m after issue costs and expenses of £18m. Apportionment is done according to the closing prices on the first day of dealing after the rights issue (October 8 2009), so for a holding of say 10000 Balfour Beatty shares that produced 4285 rights (and a lost 5/7ths of a right): * Value of ex-rights shares = 10000 * 279.6p = £27,960.00. * Value of rights = 4285 * 98.75p = £4,231.44. * Combined value = £32,191.44. * The original acquisition cost is split accordingly, with a fraction £4,231.44/&pound;32,191.44 going to the rights and £27,960.00/&pound;32,191.44 going to the ex-rights shares. So if for instance the original acquisition cost was £50,000.00 (a price chart says it does look likely to have been appreciably higher in 2007 or 2008 than in 2009), £6,572.31 would go to the rights and £43,427.69 would be carried forward for the ex-rights shares. The lapsed-rights payment would be (per right) the 287p obtained for selling the corresponding shares, minus the 180p per right being raised by the company, minus the costs of the sale, so a bit under 107p per right. You'll presumably know how much that was from the number of rights and the payment received, but if say it was 106.4p per right, the 4285 rights would have produced a lapsed-rights payment of £4,559.24. That means that the gain calculation would have come out as £4,559.24 - £6,572.31 = -£2,013.07, i.e. a loss of £2,013.07. And the acquisition cost carried forward for the shares would be £43,427.69 rather than £50,000.00 - £4,559.24 = £45,440.76 as it would be under the 'small' capital distribution treatment. I.e. it would be lower by £2,013.07, resulting in any eventual gain being higher by that amount and CGT potentially higher by 20% of it, i.e. £402.61. (In general, when the 'small' capital distribution treatment is available, actually using it is always a similar trade-off between increases/decreases of realised capital gains/(losses) and equal-and-opposite decreases/increases of unrealised capital gains/(losses). You might not want the trade-off it offers you, e.g. because you might want to realise an extra capital loss because your net realised gains are over the CGT allowance. If you don't want it, you don't have to take it, i.e. the quote you've found is a bit over-prescriptive in the case when the capital distribution does count as 'small' - see https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57838 to confirm this. Not that it matters in this case, as 'small' capital distribution treatment isn't on offer here.) Anyway, given the likely fall in value of the BBY holding between purchase in 2007 and 2008 and the rights issue in 2009, it does seem likely to me that the treatment as a part disposal would have realised a loss. Which may help to explain why there is nothing about it in the notes would have about the 2010 tax return: if realised gains elsewhere were obviously below the CGT allowance, one might very naturally not even think of looking for realised losses - and realised gains were likely to be rare in the 2009/10 tax year, given what the market had been doing... That might well have been a mistake, because if one has more realised losses than realised gains in a tax year, one can carry the excess losses forward and use them in a future tax year. But if that mistake was made, it's too late to correct it now: there's a deadline beyond which realised losses cannot be claimed, which for the 2009/2010 tax year I think was 5 April 2014 (not entirely certain of that, because there was a rules change about loss-claiming deadlines around 2009/2010 - but I am certain that it was no later than 31 January 2016). They might have been claimed before the deadline and if they were, they would then be 'in the system' and either have been used against gains in excess of the CGT allowance or still be available as carried-forward losses, but unless that happened (check the tax returns!), they're lost with no hope of recovery. Equally, though, if in the 2009/2010 tax year realised capital gains were below the CGT allowance and realised capital losses were below realised capital gains, there would probably have been no reason at all to either mention CGT in the tax return or claim the losses. So I'm not saying a mistake was made, just that it might have been and if it was, it is now uncorrectable. Gengulphus
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