Shares and CGT - help !

rinkydinkpanther

I'm trying and failing to get my head around shares and Capital Gains tax - hope someone can help.

My husband has quite a lot of shares through sharesave schemes with his company. As well as his ongoing schemes, he also has 20,000 shares which are now his outright and for which he has a share certificate.

He wants to transfer half of these shares to me, in order that when we decide to sell them, we can both make use of our individual CTG annual allowances. To do this he needs to complete a Stock Transfer Form. In order that this transfer doesn't attract stamp duty, and because these shares are a gift allowed under HMRC rules to his spouse, the "value" of these shares will be shown as NIL on the transfer form. So far, so good.

When he sells his shares, he'll have to tell the taxman ( I think ?) He'll declare how many of the shares he's sold, what price he bought them for, and hence what the net profit is for CTG purposes. Lets say he bought them for 50p each, sells for £1.50 each, profit for CTG purposes is £1 per share.

But when I sell my shares (which were also purchased for 50p when my husband bought them), how do I calculate profit ? Presumably as the cost to me was nil - as they were a gift from my spouse, if I sell for £1.50, this is all profit ? Or have I got this completely wrong ?

Neither of us completes tax self assessment forms - we are both PAYE. However, he has sold some shares already this year, making a profit of about 3k - well under the CTG threshold. Is it up to him to volunteer this information to the tax office ? Or does he only have to do this at the point that his profit would exceed the CTG allowance ? And when does he have to do this ?

We aren't really intending to sell more shares in any one financial year than would be covered by our CTG allowances in order that we minimise our tax liability, but I'm really confused about what and when we have to tell the taxman - don't want to find ourselves in hot water !

However if the price of the shares went up to the point where the increase in profit would overwhelm the hit we'd take on the tax, then that would be another story. But again, I don't know at what point (and how ?) we go about declaring the sale and calculating the profit.

Thanks to anyone who can explain this to me in simple terms !

Lokolo

Ok I cannot give you specifics. But.

- He doesn't sell his shares to the taxman, he sells them to other people usually through a stockbroker.

- The bit about CG = £1 per share is correct for him.

- Not sure about you, I think you do the same, even if they were not bought by you, they were still bought at X price.

- The tax return form adverts, you must have seen them, you must do this and that before X date blah blah blah. Its that what you need to do. It is half voluntary, but you have to do one if you earn X amount through job or shares.

Hope this helps for starters, someone else will come along with specifics

mrkbrrws

When your husband gifts the shares to you, it is deemed that they were sold to you for the same amount as they cost him. So when you sell, you still deduct the original cost to calculate your gain.

You each have an annual exemption of £10,100 for 2009/10. If your gains exceed that amount you would be required to inform HMRC within 6 months of the end of the tax year. They would then issue a Return to be completed.