Selling Bld Soc demutualisation shares

[Deleted User]

Never bought or sold a share in my life, so I was hoping someone can give me a steer on this - I have held on to shares in a former building society that demutualised - I'm not contemplating buying a small island - I just received the minimum allocation!

I have no idea about the Income Tax on this (or is is Capital Gains Tax?)- if I am to be hammered on the proceeds, I might not bother - is tax payable on the whole sale price, or on the difference between what they were worth on the day I receved them and their present value, or on some other figure?

If I am to get belted on the proceeds, given that the dividends aren't too bad, I might hang on to them.

Thanks folks!

WR

steveteach

Hi Unless you have lots of other capital gains in the same year, you should have no problem with capital gains from selling your few shares.

ctm_2

It's on the gain, so the difference between the purchase price, and the selling price. This amount is then potentially reduced by various things. I'm not that knowledgeable on capital gains though, so can't give a definite answer.

However, you get an allowance for capital gains. Only the portion of total capital gains above £8500 in this year are taxable, so if your gain is below £8500, you don't need to worry.

ReportInvestor

Well done for holding on .

If you just received the bare minimum in shares then even at Northern Rock these would "only" have given you £4690 capital gains on the sale of 500 shares - well within your annual CGT allowance.

The rising dividends you have been receiving count as income for tax purposes in the relevant past tax years. As a share novice, you will have learnt the lesson that steadily rising dividends are a key factor for successful investment and underpin a company's share price in tough times like 2000-03.

When selling demutualisation / windfall shares the cost of acquiring them is £0 for capital gains tax purposes.

If you don't mind me asking, which did you have, how many and how much are they now worth?

[Deleted User]

Hi there - I had just over the qualifying minimum savings with the Leeds PBS (by about £11 - phew!:D ); they demutualised, joined up with the Halifax and are now part of HBOS. My 185 shares were worth about £9.60 each around the end of the week so that's in the order of £1770.

We are looking to pull together cash for adding an extra bedroom to our house, and I'd rather not borrow the money for it, so am looking at all the options. The share dividends are less than £100 each year and of course are taxable. To pull together the funds, we are looking at savings accounts, etc.

I have a half share in a very small property, which a relative has offered to buy off me, (she owns the other half) but I have resisted that. My half share generates about £1300 per year in rent. I tried to work out how much would I need to have in a bank account to generate that income from interest and don't think my half share is worth that. I know it's slightly off topic, but is there some kind of accepted formula to work out what a fair sale price would be, based on a known rental value? As a general approach, I feel that I should be trying to obtain more assets, not get rid of them. Plus, as the sale price would be over the Capital Gains Limit, the majority of the sale price would attract tax, so I'm not that keen to sell.

To get back on topic (!) am I correct in believing that selling the shares would be dealt with under Capital Gains Tax rules, rather than Income Tax ones, and as I have no other Capital Gains this year, all the resulting proceeds would be tax free?

Like I say, I am new to this! Obvious or what?

WR

ReportInvestor

Wild_Rover wrote:

To get back on topic (!) am I correct in believing that selling the shares would be dealt with under Capital Gains Tax rules, rather than Income Tax ones, and as I have no other Capital Gains this year, all the resulting proceeds would be tax free?

That's correct .

ReportInvestor

Wild_Rover wrote:

Hi there - I had just over the qualifying minimum savings with the Leeds PBS (by about £11 - phew!:D )

Well done. Your return beat anything else on offer in the investment world in the late 1990s .

But your £111 investment is still £11 more than some Halifax directors had in Birmingham Midshires BS when Halifax took it over :rotfl: