Do I need to pay tax?

CrazyCoder

I recently sold some shares that were left to me through the
Halifax share dealing service. One thing I am unsure about
is whether I need to pay tax on the monies received from
the sale. If so how do I go about this? Or is this
included in the commission.

Thanks in advance
CC

Peter-Pan_5

You are supposed to tell the IR of any income in your tax return,I think.!!

Milarky

These shares represent a 'gain' [difference between what you paid for them - 'nothing' - and what you received for them] and may generate a captial gains tax liabilty as a result. Except that

- you [everyone] gets an annual 'exemption' from CGT of the first £8,200 of gains

- if you have held the shares for several years, this can further reduce any potential liability still further - possibly wiping it out.

Yes, you are supposed to put this on your tax return - and to request a tax return if you haven't received one in order to report this kind of thing so that - in theory - the Revenue will work out your tax bill for you [they like sums]

But you don't need to worry about this until the tax year in which you sold them has ended. Also, if the amount raised would be less than your annual exemption [and you haven't sold anything else which raises a 'gain' in a similar way] then there would not be anything to report IMO - you'd only include this on a tax return if you were sent one or because the value of the sale meant there was likely to be a CGT charge.

cheerfulcat

Hi, CrazyCoder,

If the shares were sold in the tax year 05-06 you *don't* have to fill in a self-assessment form UNLESS a) the gain is more than £8500 ( allowance for 05-06 ) OR the total proceeds come to more than 4 times the annual CGT allowance ( even if your gain is less than the allowance ).

More information -

http://www.direct.gov.uk/Topics/Money/TaxBasics/TaxBasicsArticle/fs/en?CONTENT_ID=4016313&chk=84Gi3Z

The gain is calculated as current value minus the value of the shares on the date of death of the person who left them to you. You may also subtract any transaction fees. There is also taper relief; holding shares for a certain number of years reduces your liablility somewhat, to a maximum of 60% of the gain for non-business assets ( most shares ) and 25% for AIM listed shares ( check, or post the name of the company here and someone can tell you whether they are AIM shares ). More details -

http://www.moneyextra.com/jargon/Calculating-CGT-004051.html

You can look up most historic values here -

http://uk.finance.yahoo.com/

Click "symbol lookup" ( or if you know the ticker, just enter it ), enter the name of the company, then click on the name on the resulting page; there should be a link in the box on the left hand side to historical prices.

HTH

Cheerfulcat