Capital Gain tax On shares

markoptions

)Can someone confirm or correct the following relating gains and losses on shares

Please assume that the annual cgt relief is £11k here. ignore Income tax

Year 1
Gains 11k Losses 22k
Year 2
Gains 11k Losses 22k
Year 3
Gains 11k Losses 15k
Year 4
Gains 55k Loses 4k

Calculations
Year 1 No Tax ( 11k gain - 11k Relief) 22k losses cfwd
Year 2 No Tax (11k gain - 11k Relief) 44k losses cfwd (cumulative)
Year 3 No Tax (11k gain - 11k Relief) 59k losses cfwd (cumulative)
Year 4 No Tax
(55k gain - 11k Relief) = 44k
59k losses + 4k lose = 63k losses - 44kgain (sfter relief) = 19k loss to cfwd and no tax to pay


Many thanks

Mark

noh

You can only use the CGT allowance against a gain in the same year. If you don't make a gain then the allowance is lost.
Therefore using your example.

Calculations
Year 1 No Tax ( 11k gain - 22k loss) 11k loss cfwd
Year 2 No Tax (11k gain - 22k loss) 22k losses cfwd (cumulative)
Year 3 No Tax (11k gain - 15k loss) 26k losses cfwd (cumulative)
Year 4 (55k gain - 4k loss) - 26k cfwd loss - 11k relief = 14k gain on which CGT is due.

markoptions

Hi

I'm not sure i understand this
Taking the 1st year 1 make an £11k gain , but also make £22k in losses . These are unrelated trades. Why must i deduct total gains from losses made elsewhere in the same year. Why can't i use my relief on the gains and carry forward my total losses.

martinsurrey

markoptions wrote: »

Hi

I'm not sure i understand this
Taking the 1st year 1 make an £11k gain , but also make £22k in losses . These are unrelated trades. Why must i deduct total gains from losses made elsewhere in the same year. Why can't i use my relief on the gains and carry forward my total losses.

because that is not how the rules work.

noh is right.