how to calculate capital gain tax for shares?

daxu

Hello everyone,

I have been trying to work out how to calculate capital gain tax for share dealing. Been reading through some tutorials, but still have some questions.

Lets say I spent 500£ on share A and 500£ on share B. Later I sold share A for 600£(100 profit excluding fees) and then spent 500£ on share C. As a result when I am doing self assessment, I hold Share B and Share C.

My question is do I have a capital gain?

Many Thanks

CLAPTON

yes

capital gains are worked out on realised gains i.e. once you sell them.

so there are no gains or loses for shares B or shares C because you haven't sold them

your only gain is 100 on share A;

Dead_keen

daxu wrote: »

Hello everyone,

I have been trying to work out how to calculate capital gain tax for share dealing. Been reading through some tutorials, but still have some questions.

Lets say I spent 500£ on share A and 500£ on share B. Later I sold share A for 600£(100 profit excluding fees) and then spent 500£ on share C. As a result when I am doing self assessment, I hold Share B and Share C.

My question is do I have a capital gain?

Many Thanks

Yes, you have a capital gain. However, you haven't given us enough info to help you calculate the gain (unless all the shares were really bought for £500).

Here's a summary of the rules.

1. Shares in a company all look the same (assuming that they are the same class). So tax legislation pretends that you sell your shares in a particular order. The way that the legislation pretends which shares are being sold depends on when you sold shares A and when you acquired shares C.

2. So while you think you sold shares A, for tax purposes you may well have actually sold shares C if you bought them within 30 days of selling shares A.

3. Assuming you didn't buy shares C within 30 days and the sale was after 5 April 2008, tax legislation will pretend that you sell some of your shares A and some of your shares B.

4. In this case the cost of your shares that you sell will be the weighted average of the A and B shares (£500 in your example but it will be different if the prices were different).

5. Once you've worked this out, you can deduct it from the £600 sales proceeds and then reduce it again by the costs of selling your shares.

6. The calculation can be different if you bought your shares under an employee share plan.

7. If you want an explanation of the current rules, have a look here: www. hmrc.gov.uk/manuals/cg4manual/cg_app10.htm (and delete the space)

John_Pierpoint

Most of us probably adjust our affairs so we can write "Gains less than X on sales less than 4X"
where X is the tax free gain allowed each year.

http://www.hmrc.gov.uk/rates/cgt.htm

daxu

Hi,

Thanks very much for all the replies. I can safely say that my gain is well under 9,600 as I tend to buy and hold forever (proven to be stupid for some shares already).
I have an accountant who is doing assessment for me and he wants the capital gain figure. As my gain is definitely much less than 9600, can I just give an overall esimate to him (so save me the headache to go into every details)?

Many Thanks

noh

John_Pierpoint wrote: »

Most of us probably adjust our affairs so we can write "Gains less than X on sales less than 4X"
where X is the tax free gain allowed each year.

http://www.hmrc.gov.uk/rates/cgt.htm

Yes but unfortunately some of us made gains of less than 0 so still need to do the calculation!

JuniperBerry_3

Something on this subject I'm not clear on - and I've never seen explained - is what happens if you don't buy the shares ?
In my situation the shares were purchased by my gradfather in the 1960s. They were left to me in his will about 10 years ago.
At that time they were of course valued for probate.
So, if I sell £10,000 worth today does that trigger a CGT liability (because it's over £9600 and all of it is considered gain) or do I subtract the value 10 years ago when probate was granted and my gain is the difference ?

00ec25

JuniperBerry wrote: »

do I subtract the value 10 years ago when probate was granted and my gain is the difference ?

correct
as with any asset which you inherited (house, shares, cars, art works etc) then the CGT is worked using the probate value as "your" purchase cost

JuniperBerry_3

That's good to know I can use the probate figures. As 10 years ago was pretty much the top of the market it means CGT isn't going to be an issue !

One other CGT question. A lot of the shares are in Cadburys. It's looking likely that in the next few weeks they will be bought by Kraft and if that happens I will get about half the value in Kraft shares (which I would keep) and half the value as cash. That cash could be as much as £10,000. Although not my choice I assume the revenue consider that a capital gain but how on earth do you work out the tax in that situation ?

Thanks