CGT on shares when purchase price unknown

wraighty

Hi,
I have a mixture of BT shares. Some were free shares and others were purchased through sharesave schemes. Unfortunately I do not remember the option prices I paid for them. If I sell them, how should I work out any gains in order to calculate the CGT.
Thanks

dunstonh

Some were free shares

That is easy. Purchase price is nil. The whole amount, minus costs is a gain.

others were purchased through sharesave schemes.

Which means there is likely to be an audit trail from the sharesave administrator. So, you contact them.

wraighty

True, there is an audit trail but it's been so long that I don't know which sharesave schemes the shares were purchased under. To complicate it, the purchased shares were consolidated onto one certificate with the O2 demerger. Also, if I just sell some of them from my Investment Account, I wouldn't know if they were the shares I made a loss on or otherwise.

ColdIron

What is the value of the shares? You have an annual CGT allowance of £11,100. Could you presume nil cost and divest to the value of the allowance over a year or 2 or 3?

Heedtheadvice

When you have acquired various shares in one company of the same class over a period (unless selling within thirty days of purchase) Hmrc have special rules for that. It is called Section 104 (from memory) and the shares are considered a pool. You therefore do not sell (or buy) specific shares but just part of the pool.

The calculation is not difficult but you need to have full information of what you have acquired, at what prices, and thus can calculate what the gain is on any sale....And then the value of any shares remaining.

Hmrc have good info, the calculations to be applied and examples on their website. A quick search will bring up the info under 'hmrc section 104 capital gain'.

Pincher

You can claim estimated figures on the tax return, and "show working". File it early, and the HMRC tax inspectors will come back to you, one way or another.

Basically, if they think it's worth the bother, they will give you a calculation to their liking. If you don't agree, challenge it.

Ideally, they will just agree with your estimates, and let it go.

Not everybody has paper work going back to the beginning of time.

dunstonh

We are close to a new tax year. So, selling over two tax years is easy. If you have a spouse, you could transfer half of them. So, that is four lots of CGT allowance.

What is the value of the shares?

wraighty

I am not looking to sell yet. Just wondering how to do it when I need to. When the price is right I would want to sell the lot in one go. I paid a lot for some of them so have been waiting to break even at least. That may never happen! I'll most likely leave them to the kids in the end.
I didn't know about estimating values for HMRC so that seems a good option. Thanks to all for your replies.

Malthusian

wraighty wrote: »

I'll most likely leave them to the kids in the end.

Don't let the tax tail wag the investment dog. Holding on to them and leaving them to the kids may be appealing as CGT would be extinguished on death, but having their entire inheritance in a single share could wipe two-thirds off the value or more (as it did in 2009), whereas switching them into something less risky would only cost at most 10/20% off the excess of gains over £11,100 (and there is plenty you can do to mitigate that as other posters have said).

There are ways of using your CGT allowance while still holding on to the shares. For example, you could sell £X of BT shares, where £X uses up your CGT allowance, and your spouse would buy £X of BT shares at the same instant. That way you've reduced your CGT bill, but still have all your shares (or close enough) to sell at a time of your choosing.

Or you could sell £X of BT shares and at the same time buy £X of BT shares within a stocks and shares ISA.

Neither of these are covered under the "bed and breakfasting" rules.

rpc

Don't let the tax tail wag the investment dog

I used to have shares from a company scheme.

The question I ended up asking was "If I had £x (disposal value) then would I buy these shares?" The answer was no, so I sold them.

I suspect the answer is usually the same, but for some reason many people, my historical self included, look at it differently when these sorts of schemes (or inheritance) apply.

Pincher

Should have tried to get into Google 17 years ago.
That was an option scheme worth having.
Even secretaries became dollar millionaires.

Took a job around 1995 in London. Too much work permit hassle, otherwise could have joined Microsoft in Seattle, that was another juicy option.

The one I did get was fixed at £5 a share, but you can't cash in until five years are up. By 1999 the share price was around £18. An old timer cashed in, probably 20 year+ service, and got about £100k cash in hand, presumably before tax. I think some of them were shares he bought years ago, so might have been transferred into ISAs, if he was smart.

Anyway, after hiring anybody who can program for the Y2K bug, they started making people redundant in the year 2000. By the time they got rid of me the share price had slumped to £12. Fortunately, redundancy meant I could exercise the share option early, and I (bought at £5 then) sold at around £10.

The people who stayed could not exercise their option, and by the time five years are up, it was about £1. :rotfl:

Life, it's enough of a roller coaster just taking the tube to work every day. Who needs Alton Towers?