Shares capital gains more confusion

lotsadogs

Some time ago I posted on here asking for help in understandign the capital gains rules on share sales. I got some brilliant advise from a number of you for which I am very greaful.

I sort of got my head round it, decided the "realised gains", which is what I understand matter for capital gains tax purposes, where well below the threshold.

I decided I could sell some more shares. but then, before doing so, in a moment of self doubt, I sent my situation off to a family friend "accountant", whose credentials I am unsure of, other than she lives in a big house and is a good friend and nice lady.......

Anyway, she says that I am OVER the tqax threshold for 09/10, so I cant sell any more without incurring further tax. Bummer.

So, I am back to square one, confused. So I though Id come back on here and ask you good people again for your knowledgable help..... PLEASE....

In brief summary. I bought a bunch of shares for £15k.They went up a lot and I sold most of them, then they went down a bit so I bought most of them back within a few days of the sale, failling within the 30 day ruls as I understand it. Now they are valued at £30. In between times I have taken £6k out of the situation, back into my pocket.

So origianal investment £15k. Profits taken to date £6K. Current value of estate circa £30k.

Are my "realised profits" £6K? Or are they the sum of all the sales even though most of the sale proceeds went back into buying back the same shares within 30 days?

All help greatly appreciated. Many Thanks x

tonygee_3

Hi lotsadogs,
Congratulations on your trading.;)
Would have thought your realised profits of 6K enable you to take further profits up to the annual limit.Seek second proffessional opinion.You could wait till next tax year to sell but obviously there will be swings till then.
Best of luck,tonygee

CLAPTON

there is not sufficient information to comment..
give a specific example for all the dealing wifh one share type

Biggles

lotsadogs wrote: »

So original investment £15k. Profits taken to date £6K. Current value of estate circa £30k.

I'm afraid, as Clapton says, that's insufficient info. You don't need to give the share name but you would need to say how many were bought at Xp, how many were sold at X1p and how many were then bought again at X2p.

(Though it would seem unlikely that you are over the threshold)

lotsadogs

CLAPTON wrote: »

there is not sufficient information to comment..
give a specific example for all the dealing wifh one share type

OK Will do. Here goes. Barclays shares. Not the best thought out actions - but I got a bit over excited at times. And had little idea what I was doing, though luckily it sems to have panned out well. Hey ho. Ive learned some stuff since then But not enough about capital gains.

OK Barclays
Buys
10 March 602 @72.99
16 March 2242 @ 88.39
02 April 2618 @ 170.68

Sells
15 April 5000 @ 198.21
Wished I hadn't sold - was a bit pver excited. :beer:

Buys
16 April 4390 @204.45
17 APril 583 @ 220.17

Sells
05 May 5000 @300.03

Buys
06 May 4565 @ 292.97
11 May 190 @ 278.44

I have done very simillar actions with Lloyds but at only about 1/2 the investment as barclays. But if someone can tell me how to work this out - then I can work the lloyds out out for myself.

Thank you all so much. Its so generous of you to give help to those with much less knowledge. Thank you thenk you thenk you.

lotsadogs

tonygee wrote: »

Hi lotsadogs,
Congratulations on your trading.;)
Would have thought your realised profits of 6K enable you to take further profits up to the annual limit.Seek second proffessional opinion.You could wait till next tax year to sell but obviously there will be swings till then.
Best of luck,tonygee

Thank you Tonygee:A. Beginners luck methinks . But suits me. To be honest, I feel really rather guilty. But I have offset some of that guilt by donating a big chunk to charity and giving everyone at work a bonus.

Biggles

You will certainly have to think about CGT when you dispose of your existing holdings.

I would suggest you go here: http://cgtcalculator.com/default.htm, read the instructions, and input the details of all your transactions into the calculator.

You may find (depending on the profits from Lloyds) that you will get away without paying CGT this tax year.

You can then put various 'what-if' scenarios into the calculator to see whether you can sell any more this year or whether you would do best to wait until the new tax year starts on 6 Apr 10.

debbie42

lotsadogs wrote: »

OK Barclays
Buys
10 March 602 @72.99
16 March 2242 @ 88.39
02 April 2618 @ 170.68

Sells
15 April 5000 @ 198.21

The very basics are that CGT is calculated on the profit made between buying and selling something. So, for example, with the above (leaving aside the dates: see below), you have bought shares at a combined value of:
(602*72.99p)+(2242*88.39p)+(2618*170.68p)
i.e. 5462 shares costing a total of £6889.50
(That averages out at 126.14p per share)

(as an aside: have you included stamp duty and dealing charges in these figures?)

You then sold 5000 shares at 198.21, so have made a profit of around 5000*(198.21-126.14) = £3603

You only ever need to work out CGT figures when selling stuff, and crystallizing losses/gains, not when buying stuff (and, of course, not within an ISA!).

It can get a bit more complicated when you are buying and selling the same shares within 30 days of each other. I'm not completely sure of this myself, as I've never had to do this, but hopefully someone else will comment on this. This is sometimes called "bed and breakfasting", and you don't then take the average cost of the shares, but need to work out any gains using the last in/first out values.

I wouldn't personally hold onto shares just to avoid paying CGT: I'd also consider where I though the shares might be heading in value. It's pointless hanging onto a share simply for tax avoidance when the value might drop well below any tax you might be paying!

lotsadogs

Thank you biggles and Debbie for your help. Il check out the calculator thingy - that sounds usefull. Debbie. I understancd the basics you describe its the 30 day rule that is doin in my head. But thank you anyway. It is very good of you to give up of your time and experience to help me.

lotsadogs

debbie42 wrote: »

I wouldn't personally hold onto shares just to avoid paying CGT: I'd also consider where I though the shares might be heading in value. It's pointless hanging onto a share simply for tax avoidance when the value might drop well below any tax you might be paying!

And this is a very great point that I need to bear in mind at all times. Early on I had decided that I would just sell below the cap gains threshold. But I got a bit carries away. Important though that I dont dtay rooted in my oroiginal ideas as mey experince grows. Your point has made me rethik - thank you.

debbie42

lotsadogs wrote: »

I understancd the basics you describe its the 30 day rule that is doin in my head.

What it means is, as a simple example, if you bought (all of the same share)
100 @ £5 in may 09
then buy 100 @£10 in 01 aug 09
then sold 100 @£20 in 05 aug 09

You wouldn't average the cost between the may and aug purchase (i.e. an average price of £7.50) like I did in the earlier post. You'd have to use the prices of £10 and £20 when working out the CGT liability between the sale and purchase of the two later deals, as they were within 30 days of each other. I think that's how it works.

It explains it in more detail here:
http://www.hmrc.gov.uk/cgt/shares/find-cost.htm