Capital gains and Northern rock shares

cnile_2

Can anyone tell me, is it possible to use the losses from Northern rock shares that went down the pan in 2007, against capital gains for 2014/2015 tax year.

Keep_pedalling

You can provided you actually reported those losses within 4 years of the end of the tax year you took the hit.

IanManc

Keep_pedalling wrote: »

You can provided you actually reported those losses within 4 years of the end of the tax year you took the hit.

I'm confused!

If the losses were incurred in the 2007/08 tax year, then on the basis you suggest he/she'd have to report the losses within four years of the end of the tax year incurring the loss, i.e. within 2008/09, 2009/10, 2010/11, or 2011/12. So how could he/she then set the loss against 2014/15?

cnile_2

Thanks for the reply. Unfortunately I didn't tell tax of losses so it looks like I get stung twice now.
Is there any way of offsetting tax such as re-investing

Keep_pedalling

IanManc wrote: »

I'm confused!

If the losses were incurred in the 2007/08 tax year, then on the basis you suggest he/she'd have to report the losses within four years of the end of the tax year incurring the loss, i.e. within 2008/09, 2009/10, 2010/11, or 2011/12. So how could he/she then set the loss against 2014/15?

You can use losses going back many years to offset gains, but you have to make HMRC aware of those loses within the the 4 year time scale. So even if you think you will never have future gains to set those against is is worth reporting them just in case that watch you brought at a jumble sale for a £1 turns out to be worth £20,000 when you sell it in 10 years time.

Keep_pedalling

cnile wrote: »

Thanks for the reply. Unfortunately I didn't tell tax of losses so it looks like I get stung twice now.
Is there any way of offsetting tax such as re-investing

What did you sell and when did you sell them? Were any of these assets from Employee Share Schemes?

IanManc

Thanks for the reply Keep pedalling. I've learned something!

bowlhead99

Keep_pedalling wrote: »

You can use losses going back many years to offset gains, but you have to make HMRC aware of those loses within the the 4 year time scale. So even if you think you will never have future gains to set those against is is worth reporting them just in case that watch you brought at a jumble sale for a £1 turns out to be worth £20,000 when you sell it in 10 years time.

Just to be "that guy"; a watch would be a "wasting asset" which HMRC don't think of as having a life of more than 50 years, hence is immune to CGT, same as a classic car.

You're entirely right of course that if you have a loss on shares it can be worth "banking" them by telling HMRC so you can carry them forward for when you need them.

cnile_2

Keep_pedalling wrote: »

What did you sell and when did you sell them? Were any of these assets from Employee Share Schemes?

I sold stocks and shares in three company's. Thought I was O.K. until Standard life paid me for the 9 for 11 shares with their consolidation. this has put me over the capital gains allowance.
Some free hand out, I am now going to pay tax on my own money!

bowlhead99

cnile wrote: »

Keep_pedalling wrote: »

cnile wrote: »

Is there any way of offsetting tax such as re-investing

What did you sell and when did you sell them? Were any of these assets from Employee Share Schemes?

I sold stocks and shares in three company's. Thought I was O.K. until Standard life paid me for the 9 for 11 shares with their consolidation. this has put me over the capital gains allowance.

You asked whether there was anything you could do "such as re-investing". But you didn't answer the question about when you sold them.

If any of the three companies were sold in the last few weeks of March this year you could always buy the shares back again (or some of them) next week. If you re-buy a share within 30 days of selling it, the capital gain is calculating by matching the sale to the later re-purchase rather than the original purchase. This could result in a much lower gain or even a loss, for that March sale transaction. Then you could sell the shares again in April and the gain compared to your original cost would fall into the 15/16 tax year.

Doesn't sound like this is going to work for you, if it's true that you had sold shares within your limits and then the SL share return came along and messed up your plans. The fact that SL were going to be sending you a 73p per share return was announced (subject to regulatory approval and a vote) on 4 September 2014 so I'm guessing the three companies you sold were all before that, and therefore it's way too late to be thinking about buying them back in a 30 day window.

Some free hand out, I am now going to pay tax on my own money!

Slight correction, seems like you meant "I am now going to pay tax on my own profits!". Which is what we all do.

I presume you made the election for SL to be taxed as a capital return, on purpose, rather than the default method of it being taxed as a dividend, by telling them you specifically wanted that treatment? If so, I'm presuming it's because you are a higher rate taxpayer, because lower rate taxpayers get their dividends tax free.

So, if you are a higher rate taxpayer and you specifically chose the capital option instead of the income option, when capital gains for higher rate taxpayers are taxed at 28% and dividend income for higher rate taxpayers is only taxed at 25%, I'm assuming the reason you went for the capital treatment is because you had a decent chunk of capital gains allowance left before the SL sale happened.

So, despite protestation that you've been 'taxed on my own profits' you have only been taxed on part of them. To most people that's a "nice problem to have", though I appreciate it doesn't help you out...