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DEl

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[Deleted User]
[Deleted User] Posts: 0 Newbie
Third Anniversary 10 Posts
edited 29 January 2022 at 1:44PM in Savings & investments
this has been deleted
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  • ColdIron
    ColdIron Posts: 9,879 Forumite
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    edited 2 June 2020 at 3:40PM
    It's calculated on disposal, when you sell
  • p00hsticks
    p00hsticks Posts: 14,460 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 2 June 2020 at 3:51PM
    It's basically calculated on (selling value - buying value).
    You can use your CGT allowance in the year of disposal if you haven't already used it that year, but - like income tax - the allowance is on a 'use it or lose it' basis - that is, you can't also apply any unused allowance from previous years you held the shares.
    Unless of course you hold it in a stocks and shares ISA, when you don't need to worry about any of it  :)
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Post of the Month
    edited 2 June 2020 at 3:50PM
    If you sold all the shares in year 3 with those example numbers you will have a gain of £85000 over and above your purchase cost of the shares you are selling (£85 per share profit x 5000 shares sold). You could reduce that gain by selling fewer shares (e.g. only sell half of them and hold on to the other 2500 shares, then you would only make half the gain in that tax year).

    If you leave it to year 3 to sell, the gain is a lot more than your annual exemption (currently the first £12300 of gains in any one tax year are exempt, so if you made £85,000 of gains there would be tax to pay on the remaining £72,700 of gains that weren't exempt).

    If instead you sold all the shares in year 1, you would be selling shares for £10,000 that had cost you £5000, which would be well within your annual exemption, so there wouldn't be any tax to pay. However, unfortunately you then won't have the shares to be able to sell them in year 2 or 3 when you could have got more for selling them.

    It but - like income tax - the allowance is on a 'use it or lose it' basis - that is, you can also apply any unused allowance from previous years you held the shares. 

    Typo warning, you mean you *can't* also apply any unused allowance from previous years you held the shares...
  • p00hsticks
    p00hsticks Posts: 14,460 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic

    It but - like income tax - the allowance is on a 'use it or lose it' basis - that is, you can also apply any unused allowance from previous years you held the shares. 

    Typo warning, you mean you *can't* also apply any unused allowance from previous years you held the shares...
    Thanks - I've gone back and corrected it. No matter how many times I re-read something before posting. there's always something I seem to miss !
  • Eco_Miser
    Eco_Miser Posts: 4,863 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    The gain when you sell is the net amount you receive after transaction costs, less the gross amount you paid including transaction costs & stamp duty. Then subtract one year's CGT allowance (if you've not already used it against other gains) and multiply the result by the tax rate.
    Eco Miser
    Saving money for well over half a century
  • itwasntme001
    itwasntme001 Posts: 1,261 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    What do you do about broker fees (for both buy and sell) if the fees come out of trading credits such as with interactive investor?  Do you still net the amount as part of the sale proceeds and add them as part of the overall cost for the original purchase?  So ignoring the credits existed in the first place?
    Do interactive investor have a report for capital gains for taxable accounts, much like what they have for dividends received?
  • eskbanker
    eskbanker Posts: 37,323 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Deleted_User said:
    would it be feasible and/or financially wise in this hypothetical situation to only sell £12300 worth of shares per financial year?(assuming I was ready to sell)
    Nearly - if you're looking to sell anyway, rather than retaining investments for the long term, then you can indeed optimise your CGT situation by selling some every year to use up your allowance, but remember that (as pointed out by others above) CGT is all about the value of the gain not the gross sale value, so you'd sell enough units to realise a profit of £12,300 (or whatever the CGT allowance is in future years).
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    10,000 Posts Fifth Anniversary Name Dropper Photogenic
    edited 2 June 2020 at 8:00PM
    If you sold all the shares in year 3 with those example numbers you will have a gain of £85000 over and above your purchase cost of the shares you are selling (£85 per share profit x 5000 shares sold). You could reduce that gain by selling fewer shares (e.g. only sell half of them and hold on to the other 2500 shares, then you would only make half the gain in that tax year).

    If you leave it to year 3 to sell, the gain is a lot more than your annual exemption (currently the first £12300 of gains in any one tax year are exempt, so if you made £85,000 of gains there would be tax to pay on the remaining £72,700 of gains that weren't exempt).

    If instead you sold all the shares in year 1, you would be selling shares for £10,000 that had cost you £5000, which would be well within your annual exemption, so there wouldn't be any tax to pay. However, unfortunately you then won't have the shares to be able to sell them in year 2 or 3 when you could have got more for selling them.

    It but - like income tax - the allowance is on a 'use it or lose it' basis - that is, you can also apply any unused allowance from previous years you held the shares. 

    Typo warning, you mean you *can't* also apply any unused allowance from previous years you held the shares...
    If this is the case, then would it be feasible and/or financially wise in this hypothetical situation to only sell £12300 worth of shares per financial year?(assuming I was ready to sell)
    No. Wise to Sell enough shares to make a GAIN of  12300. Which would  be much more than 12300 unless they were free. 
    And wiser still to hold them in an ISA so no CGT at all however much you sell.
  • itwasntme001
    itwasntme001 Posts: 1,261 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper
    What do you do about broker fees (for both buy and sell) if the fees come out of trading credits such as with interactive investor?  Do you still net the amount as part of the sale proceeds and add them as part of the overall cost for the original purchase?  So ignoring the credits existed in the first place?
    Do interactive investor have a report for capital gains for taxable accounts, much like what they have for dividends received?

    Does anyone have answers to this please?
    Thanks!
  • 2unlimited91
    2unlimited91 Posts: 91 Forumite
    10 Posts Name Dropper
    What do you do about broker fees (for both buy and sell) if the fees come out of trading credits such as with interactive investor?  Do you still net the amount as part of the sale proceeds and add them as part of the overall cost for the original purchase?  So ignoring the credits existed in the first place?
    Do interactive investor have a report for capital gains for taxable accounts, much like what they have for dividends received?

    Does anyone have answers to this please?
    Thanks!
    You've paid a monthly fee for Interactive Investor managing your account, which entitles you to a number of free trades. The monthly fee isn't a cost of buying or selling any investment, since you would pay the same fee even if you made no trades. So no, you can't ignore the trading credits.
    The costs of the trade are shown on the contract note, which presumably shows the applicable trade fee offset by trading credit, giving a net cost of nil.
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