Capital Gains Limit

vienly

I know the CGT limit is £11000 for this financial year, if I decide to sell some shares and for whatever the reason the gain is £11200 (example) will I need to declare this to HMRC?

The firm answer is probably a yes but as it's a £200 over the limit, but is there any leeway before the HMRC slaps you with the sh*t stick?

£11005? Is it worth declaring or am I wasting mine and their time?

[Deleted User]

Hi,

the leeway is £11,000, remember you can deduct your dealing charges.

CGT on the £5 over is only 90p.

vienly

Oh yes that it was I meant, after the dealing charges and the gains are say over by £5 or £200, is this a grey area or they aren't too concerned?

[Deleted User]

Hi,

well you'll only pay 18% on the amount over £11,000, so even on the £200 it's only £36.

vienly

Do they take it out of the PAYE salary if it goes over?

[Deleted User]

Hi,

think you would need to file a self assesment, have a read here.

vienly

Ok thanks

[Deleted User]

Hi,

why not, if you have the option, just sell enough shares this year to keep you under the £11,000, then no need to declare.

vienly

Yeh it would save me the bother wouldn't it, thanks for the advice!

bowlhead99

vienly wrote: »

Yeh it would save me the bother wouldn't it, thanks for the advice!

The downside is that you then end up having two sets of transaction costs for selling the two separate lumps, and potentially two sets of transaction costs for buying whatever you buy with the proceeds, in two stages.

And in the meantime while you keep the rest of the shares without selling them until the next tax year you are of course at risk of them going down in value more than the tax you'd have paid on their current high value.

So, if you were literally as close to the borderline as in the examples above, with just a fiver of tax or fifty quid of tax here or there, remember those other factors.

If for example you literally had £11k CGT limit plus £5, of gains, based on stuff you'd already sold a while back - so you couldn't go back in time to sell them in two tranches - and wanted to play by the rules but really didn't want to write to the taxman to declare your 90p of tax... - you could just buy and sell another £50 of shares in some random company. Assuming you do the trades within seconds of each other, your only exposure is a few pence of stamp duty and price spread, along with the costs of the broker buy/sell fee which might only be a tenner total depending on your broker.

So, you would have made ~£10 of losses on the transaction, meaning your overall annual gain is £11k less a fiver instead of £11k plus a fiver. Your gains are within the annual exemption, so nothing to pay HMRC. Of course, it cost you a tenner to avoid reporting and paying that 90p of tax but some people might be ok with that in certain circumstances ( like if they really hate admin and the taxman...)

I may be overthinking this!

vienly

haha I guess that is one way to offset the gain, with a loss.
It's not really worth the trouble as frugalmacdugal said but I just wanted to know if it was a fine line between reporting it, and not reporting it.

I guess some people like you said, will avoid reporting if the figures are too low, hate admin and the taxman.