Capital Gains - What's the deal?

grnglide

You could always transfer some of your cash ISA holdings to an S&S ISA instead?


Holding cash unwrapped does tend to be simpler and the interest can often be greater from an unwrapped even if you pay tax on it?

Tom99

JohnRo wrote: »

ACC still pays a dividend, just internally.

Better to use INC funds for unwrapped investing which will make income much easier to record and calculate for tax purposes.

https://monevator.com/income-tax-on-accumulation-unit/

ACC funds are no harder than INC funds to account for.
All you do is ignore any equalisation sum and add the dividend to your cost for CGT and your income for income tax.

juststuff123

Understood. Thanks

Rbarr

I own a house which is lived in by my son. He is moving abroad and we now intend to sell the property. The home has never been rented out commercially. If the house is put in joint names on the deeds would this have any impact in terms of capital gains tax?

eskbanker

Rbarr said:

I own a house which is lived in by my son. He is moving abroad and we now intend to sell the property. The home has never been rented out commercially. If the house is put in joint names on the deeds would this have any impact in terms of capital gains tax?

If you sell or give some of the property to your son then that counts as a disposal for CGT purposes, so you'd need to measure the capital gain on the basis of the increase in value of that share of the property between acquisition and disposal dates, and pay the tax if that exceeds the annual allowance.

Then, separately, you'd both be subject to CGT when actually selling the property on, your liability relating to gains on your residual share since your original acquisition date and his from the date of being put on the deeds.

Dr_Dr

How is CGT calculated?
My daughter has done very well on the stock market and she will be paying CGT. I have been trying to set up a spreadsheet to the help her. I have used the HMRC calculator function but it does not answer my questions. It appears the calculation is as follows ...
1. Taxable gain = amount gain after costs - capital gains allowance (currently 12,300)
2. Unused Basic Allowance = Income tax basic Rate Limit (currently 50,000) minus Total Earned Income (including any interest earned). If greater than zero this amount is charged at 10% currently..
3. Higher rate is then determines as 1 minus 2 and charged at 20%.
My problem is in determining the Basic allowance. If the person has paid into a pension or made significant charitable donations then surely these amounts should be used to increase the Unused Basic Allowance - but I can see no evidence of that.
Any comments would be welcomed.

eskbanker

https://www.gov.uk/capital-gains-tax/rates is perhaps a clearer explanation of how to calculate taxable income (allowing for reliefs) prior to combining it with the taxable gains?

Dr_Dr

Thanks for that eskbanker. 
I have been through that link already, it does explain how you receive tax relief for charitable donations and pension contributions for your INCOME tax and I have taken that into account when calculating that tax.
I was expecting to be able to include those items again when calculating the CGT (by increasing the basic allowance by those amounts). Is it because they have already been taken into account once with income so are not factored again?

eskbanker

Dr_Dr said:

I have been through that link already, it does explain how you receive tax relief for charitable donations and pension contributions for your INCOME tax and I have taken that into account when calculating that tax.
I was expecting to be able to include those items again when calculating the CGT (by increasing the basic allowance by those amounts). Is it because they have already been taken into account once with income so are not factored again?

Yes, the reliefs available for charitable donations and pension contributions offset income tax only, not CGT as well - they indirectly affect the rate of CGT payable by being applied during the income tax calculation but they aren't actually used to adjust the CGT allowance itself.