CGT On Shares

Fairwinds

My mum wants to give away some shares but wants to aviod any CGT (£9200limit).

She holds a company that has dropped in value over the last 7 years from around £19-£20 per share to around £12/£13 today.

Would I be right in saying that if she gave away all shares she got at times of higher prices - she wouldn't have to worry. Further she could offset the losses on these shares against profit making ones, keeping below the £9200.

The latter shares are likely to come from dividend re-investments etc.

Also where (if any wherecan I get historical share prices going back 10-20 years)

Thanks a lot for any help

Elaine_Wilson

Do I understand you correctly - your mother holds shares in only one company which have been acquired on lots of different dates?

If this is so then you have no choice about which shares are disposed of.

You will need to make a list of all the purchases (whether from her own money or from dividends reinvested) together with the relevant dates. Then when some are given away there are specific rules to match the shares disposed of to the purchases. The order is -

Shares bought on the same day
Shares bought in the following thirty days
Then for shares bought after 5th April 1998 you match them on a last-in first-out basis so you just work backwards matching with the most recent purchases first.
For shares bought between 31st March 1982 and 5th April 1998 you aggregate these into a pool and calculate the average cost.
Earlier purchases are matched last.

If my assumption is wrong and she has a number of holdings come back with some details and we can work out the most tax efficient ones to give away.

Fairwinds

Thanks Elaine - she holds more than one company, I picked that one as I new it had devalued over the last 7 years, so thought she could dispose of these without worrying about CGT

Other than that you have the situation just about right.

When you say "Shares purchased on the same day" is that related to the initial purchase?

Is there somewhere that I can read up on the regulations?

Thanks for your help

Elaine_Wilson

"Shares purchased on the same day" relate to shares bought on the day of sale (or gift). I only included this for completeness and should probably have left it out to avoid confusion. It really only relates to traders who may have multiple purchases and sales in one day. Regardless of the actual order of the trades they have to aggregate the day's transactions and end up with either a net purchase or net sale.

Tax should not be the only consideration when decided which shares to dispose of but if there is no preference for other reasons then you should keep in mind the following.

If you have both gains and losses in the same tax year then these must be set against each other. There is no choice about this.

So, if she makes a gain of more than the annual exemption on some shares then it could be worth disposing of sufficient of the loss making ones to reduce the gain to that exemption.

But if the gains are say £9,000 and therefore covered by the exemption it would be a waste to also realise a loss as this would have to be set against the gain and would not be able to be carried forward.

Other considerations aside it would be useful to gift the shares showing a loss (and none showing a profit). This loss could then be carried forward to future years.

If a gain is made some time in the future then it is only necessary to use the part of the losses brought forward which will reduce the gain to the annual exemption.

Hope this is clear.