CGT on share sales under new section 104 holding

emkay_2

Hoping there are some tax experts out there that can help me with a CGT query on selling shares under the new regulations.

I'll start with a simple example, which is my understanding from help sheet hs284 where you buy and sell shares in the same company over a period of time.

start by building the section 104 holding -

in 1995 bought 1000 shares @ 4.00 cost is 4000.00
in 2000 bought 1000 shares @ 3.00 cost is 3000.00
in 2005 bought 1000 shares @ 2.00 cost is 2000.00

therefore the total cost is 9000.00 for 3000 shares ?
which means the section 104 holding cost is 3.00 per share ?

then -

in 2009 sell 1450 shares @ 7.00 = 10150.00

those same shares in the section 104 holding is 1450 shares @ 3.00 = 4350.00
so the profit was - 10150.00 - 4350.00 = 5800.00 (which is under the CGT thresold) ?

Is that correct ?

If so, how do you then deal with shares that you have previously sold when when building the section 104 holding -

in 1995 bought 1000 shares @ 4.00 cost is 4000.00
in 1997 sold 500 shares @ 3.50 value is 1750.00
in 2000 bought 1000 shares @ 3.00 cost is 3000.00
in 2005 bought 1000 shares @ 2.00 cost is 2000.00

any help gratefully received,

thanks,
Em Kay

emkay_2

thanks, that makes more sense than how I first envisaged it working.

It should be easier than in my original example because I sold the same number of shares as in the original purchase. I'll have to check the rules for past years, but it looks like I will not need to include them in the s104 holding.

My next step is to work out how company mergers in the past will have an impact. I seem to remember they issued 2.7 new shares for each of the old ones....think I saw a different HMRC help sheet for that.

thanks,
Em Kay

emkay_2

its both really, once I am confident that I know how the new CGT rules work, I will be applying it to my own small holding of Lloyds shares.

I'm trying to work out the best share price to dump my complete holding of Lloyds Banking Group without having any tax liability.

I could post up all my share details, but where is the fun in having your 'homework' done for you, I'd rather understand how it works rather than the end result.

and of course, along with any money saving loopholes...if anyone has any they would like to share:D

thanks,
Em Kay

John_Pierpoint

So you think Lloyds is a complete basket case?
The British Leyland of the banking industry?
We are in the middle of its "funny" rights issue, so you will be diluted and may get some sort of premium.
Are you going to buy the new shares and then sell?

emkay_2

that link is very useful thanks, its going to take me a while to digest that lot :eek:

thanks,
Em Kay