AIM shares and CGT

schiff

£100,000 invested in AIM shares NOT in an ISA.

Showing a profit of £100,000.

Another £100,000 of AIM shares bought using a loan from the ISA provider with the first lot of shares as security.

And again.

All £300,000 sold at a profit.

For CGT purposes is the 'cost' £100,000 or £300,000?

bowlhead99

schiff wrote: »

£100,000 invested in AIM shares NOT in an ISA.

Another £100,000 of AIM shares bought using a loan

And again.

Ok, so you have spent £300,000 buying some shares ?

All £300,000 sold at a profit

And now you have sold those shares which you had bought for £300,000 ?

For CGT purposes is the 'cost' £100,000 or £300,000?

I don't see how it could be anything other than £300,000, unless you are explaining it very badly.

Capital gains and losses are calculated from sales proceeds of what you sold, less the cost of purchasing what you sold.

Whether you funded the cost of your purchases by taking an extra mortgage on your house, or a bank overdraft, or temporary credit from a broker, or a loan secured on some other assets, or with a gift from your grandmother, you still spent £300,000, so that is your cost.

And when you received the sales proceeds (price per share times quantity of shares less dealing costs) of £xxx,xxx, your proceeds of sale is that amount of money, whether or not you immediately used that money to repay a loan, pay interest on a loan, make a gift to your grandmother, etc.


Your choice of words seems a little confusing, as you are telling us up front this is "NOT in an ISA" ... well, obviously not as you wouldn't be doing a CGT calculation for any transactions in an ISA ?? ... and then go on to tell us that further shares were bought "using a loan from the ISA provider" ... but who is this "the ISA provider" if these transactions are not being done in an ISA??

There is no "the ISA" involved in these transactions so if you have some person loaning you money who happens to be an ISA provider, it doesn't aid clarity for you to refer to them as "the ISA provider".

Did you perhaps mean "the stockbroker" rather than "the ISA provider"?

schiff

TY bowlhead that answers my question. I was asking for a relative, that's what I told him but his is a big CG and I wanted to be sure.

I mentioned the fact that the investments weren't in an ISA to make it clear that the 5-year relief wasn't a factor.

The loans were from the stockbroker, sorry.

EdGasketTheSecond

Your relative has been very lucky. So many AIM shares are duds or outright scams.

bowlhead99

This is confusing:

schiff wrote: »

I mentioned the fact that the investments weren't in an ISA to make it clear that the 5-year relief wasn't a factor.

That sentence implies that if the investments *were* in an ISA, then "the 5-year relief" would be a factor.

But if the investments were in an ISA there is no CGT, full stop. No special reliefs get factored in; simply put: any gains, losses or income occurring inside an ISA are ignored by the taxman.

So, "the 5-year relief" could not be a factor in relation to CGT on shares held in an ISA, whatever "the 5-year relief" to which you refer, is supposed to mean.

Any special CGT reliefs could only be a factor affecting how much CGT is payable if the investments weren't in an ISA.

And you have said the investments weren't in an ISA. So it is worth looking at what reliefs are available. Unfortunately I have no idea what you mean by "the 5-year relief".

Thrugelmir

schiff wrote: »

TY bowlhead that answers my question. I was asking for a relative, that's what I told him but his is a big CG and I wanted to be sure.

I mentioned the fact that the investments weren't in an ISA to make it clear that the 5-year relief wasn't a factor.

The loans were from the stockbroker, sorry.

Were the shares sold or transfered?

https://www.londonstockexchange.com/companies-and-advisors/aim/publications/a-guide-to-aim-tax-benefits.pdf

schiff

Thrugelmir wrote: »

Were the shares sold or transfered?

https://www.londonstockexchange.com/companies-and-advisors/aim/publications/a-guide-to-aim-tax-benefits.pdf

Sold....................

schiff

bowlhead99 wrote: »

This is confusing:


That sentence implies that if the investments *were* in an ISA, then "the 5-year relief" would be a factor.

But if the investments were in an ISA there is no CGT, full stop. No special reliefs get factored in; simply put: any gains, losses or income occurring inside an ISA are ignored by the taxman.

So, "the 5-year relief" could not be a factor in relation to CGT on shares held in an ISA, whatever "the 5-year relief" to which you refer, is supposed to mean.

Any special CGT reliefs could only be a factor affecting how much CGT is payable if the investments weren't in an ISA.

And you have said the investments weren't in an ISA. So it is worth looking at what reliefs are available. Unfortunately I have no idea what you mean by "the 5-year relief".

I got confused with VCT

This has now got a bit embarrassing - can we call it a day?

I've got my answer - thank you!

Alexland

schiff wrote: »

Another £100,000 of AIM shares bought using a loan from the ISA provider with the first lot of shares as security.

Which ISA provider(s) provide loans using your existing holdings as security??

Alex

schiff

Alexland wrote: »

Which ISA provider(s) provide loans using your existing holdings as security??

Alex

Brown Shipley. But it wasn't an ISA!

Alexland

schiff wrote: »

Brown Shipley. But it wasn't an ISA!

Interesting I don't think it would work with an ISA as the individual needs to remain the beneficial owner which would stop the lender getting proper control of the assets.

Alex