Section 104 question.

talexuser

Selling a proportion of unbundled for rebalancing - the average buy cost is easy enough vs sell cost, but how do you calculate the costs involved to subtract for CGT?

The initial trading cost and stamp duty might be a large figure for initial purchase, followed by a series of small costs for dividend reinvestments. If you sell let's say 10% of your holding, do you count 10% of the total costs for subtraction, and leave 90% of the costs for your remaining holding as the figure for subsequent tax years?

londoninvestor

For each purchase, take the price you paid for the shares, plus any additional costs for that purchase (especially brokerage and stamp duty, as you mentioned). Use this in calculating the average buy cost.

e.g.
Day 1: purchase 1000 shares at £10 each, paying £50 stamp duty and £11 brokerage. The cost of those 1000 shares is therefore £10,061.

Day 2: purchase 500 shares at £12 each, paying £30 stamp duty and £11 brokerage. The cost of those 500 shares is therefore £6,041.

Day 3: purchase 20 shares at £10 each (let's say it's a dividend reinvestment), paying £1 stamp duty and £2 brokerage. The cost of those 20 shares is £203.

So at this point you have acquired 1520 shares for £16,305.

If you now sell 152 shares (10% of your holding), the cost associated with them is £1,630.50.

londoninvestor

Note, this gives you the same result as what you suggest. But I think it's less hassle this way than keeping one running figure for "average price paid per share excluding additional costs", and one running figure for "total additional costs".

talexuser

Thank you for confirming. I take your point about the simplicity. Unwrapped is a new area for me the last couple of years so still learning, and I have 3 columns in the spreadsheet for buying cost, charges, and selling cost so I can compare the actual performance from buying without the stamp duty etc affecting the result. Up till now I've only sold entire holdings to use up CTG allowances, and bought back after 30 days. Now I want to do some rebalancing before April.