DEl

itwasntme001

Understood, thank you.

In terms of keeping records of the capital gains for HMRC how do I do this?  II do not provide any statement for capital gains.  All I have is the transaction history which I use to work out the capital gains.

bowlhead99

itwasntme001 said:

Understood, thank you.

In terms of keeping records of the capital gains for HMRC how do I do this?  II do not provide any statement for capital gains.  All I have is the transaction history which I use to work out the capital gains.

So, you have a transaction history and can use it to work out the gains that you make in any tax year.

Interactive Investor won't try to calculate your taxes for you because they don't know if you have any other holdings or transactions elsewhere which would impact the computation of the gain or loss you make when you sell a stock in their platform. So you have to take responsibility for it yourself. You'll need to keep the records of your purchases and quantities held so that you can figure out the right costs whenever you end up selling the shares (whether by the time you do that, you're still with II or not). If you have any accumulation funds on the platform you'll also need to record whatever info they give you about notional distributions that are accumulated in the funds so you can incorporate those in your calculations too.

Basically, hold on tight to the information you get and for each holding, keep it in whatever format you like so that you can use it when you sell the holding. Best to keep a backup somewhere too.

itwasntme001

Thanks bowlhead, that's very helpful.  I will just download the contract notes and print them, should be good enough i imagine!

Just wondering, am I right in believing that capital gains on foreign stocks that may be partly due at least to FX moves is counted for CGT purposes?  And the valuation for this on the buy and sell is whatever is stated in the contract notes?  No special adjustments need to be made at all?

Also do foreign exchanges (e.g. GBP cash for USD cash) done with my broker (in my case II) count towards the CGT calculation?

itwasntme001

Sorry for the many questions and the hijacking of this thread but thought it would be useful for others as well as for me!

kinger101

If you need to sell some shares on which there will be a capital gain, you can also sell assets at on which there is a capital loss.  This will then be deducted from the value of the capital gain before making CGT calculations.  

If the shares are an ETF, you could also annually sell ETF 1 up to the CGT threshold, and buy a very similar ETF to get round bed-and-breakfast rules.

bowlhead99

itwasntme001 said:

Just wondering, am I right in believing that capital gains on foreign stocks that may be partly due at least to FX moves is counted for CGT purposes?  And the valuation for this on the buy and sell is whatever is stated in the contract notes?  No special adjustments need to be made at all?

The gain is the pounds value of the proceeds you get when you sell (whether or not you get the proceeds in pounds or some other currency) compared to the pounds value of the costs you paid (whether or not you paid in pounds or some other currency). If you're buying currency as part of the transaction to purchase the foreign-priced shares, you can use that exchange rate that you get, otherwise just use a daily spot rate from a credible source.

Also do foreign exchanges (e.g. GBP cash for USD cash) done with my broker (in my case II) count towards the CGT calculation

If not covered by the comment above and you're buying and selling some foreign currency independent of the timing of your stock purchases and sales, then yes technically a pile of dollars or whatever is something that could make a capital gain or loss over time, and you could try to do a separate calculation for it. Or just build your actual rates achieved into the costs and proceeds of the stock purchases and sales.

Sebo027

bowlhead99 said:

itwasntme001 said:

Just wondering, am I right in believing that capital gains on foreign stocks that may be partly due at least to FX moves is counted for CGT purposes?  And the valuation for this on the buy and sell is whatever is stated in the contract notes?  No special adjustments need to be made at all?

The gain is the pounds value of the proceeds you get when you sell (whether or not you get the proceeds in pounds or some other currency) compared to the pounds value of the costs you paid (whether or not you paid in pounds or some other currency). If you're buying currency as part of the transaction to purchase the foreign-priced shares, you can use that exchange rate that you get, otherwise just use a daily spot rate from a credible source.

Also do foreign exchanges (e.g. GBP cash for USD cash) done with my broker (in my case II) count towards the CGT calculation

If not covered by the comment above and you're buying and selling some foreign currency independent of the timing of your stock purchases and sales, then yes technically a pile of dollars or whatever is something that could make a capital gain or loss over time, and you could try to do a separate calculation for it. Or just build your actual rates achieved into the costs and proceeds of the stock purchases and sales.

That's easy enough to envision if you've invested a lump sump and waiting 30 years,, but if you're regularly contributing, say monthly, in various amounts of a 20 year period, isn't that nigh impossible to calculate accurately? 

Further more for accumulating funds, if you're paying yearly tax on dividend income, that is subtract from the amount subject to CGT, correct?

bowlhead99

Sebo027 said:
That's easy enough to envision if you've invested a lump sump and waiting 30 years,, but if you're regularly contributing, say monthly, in various amounts of a 20 year period, isn't that nigh impossible to calculate accurately? 

Every time you buy or sell an investment in a foreign currency you will have a contract note telling you what it cost or what the proceeds were. So, you simply record what they were and convert to pounds (if there was a pounds-to-currency or currency-to-pounds transaction at the same time, you can just use that rate, otherwise get the spot rate from a reliable source.

Presumably if it's a broker account your purchases and sales of currency are going to be related to the investment activity you have and you aren't going to be speculatively buying and holding the foreign currency just for fun. If you are, record it. If you aren't, then most of the currency transactions will be covered as part of the investment record-keeping.

Further more for accumulating funds, if you're paying yearly tax on dividend income, that is subtract from the amount subject to CGT, correct?

If the fund is an accumulating one and has allocated you taxable dividend income and not distributed it to you, you would still treat it as taxable dividend income and a notional reinvestment, and that notionally reinvested amount would be part of your allowable cost when deciding what the allowable costs were to set against your proceeds on eventual sale.

Some people doing their investments in taxable accounts find it easier to just use distributing funds instead of accumulating ones, because the cash arriving in the account from time to time, or being manually reinvested in that fund or another fund, is an easy prompt or reminder to get the tax vouchers / dividend confirmations and update their records. If you just let the income roll up and get reinvested inside the fund with no cash movement, you then have to go back and hunt for it later.

Sebo027

Yes, but let's say I invest a £10,000 lump sum in "X fund" and then invest another £1,000 every month for 20 years. I will have contract notes for every purchase stating the amount of units and cost per unit, stating what my £1,000 was able to buy at that time. Now 20 years down the line, I click sell on all holdings. Assuming I have made a huge "gain", how is it calculated? Do I literally need to comb through 20 years of contract notes (241 in this scenario) to work out what actual "gains" were made?

Interesting point about using distributing funds when it's taxable... 

ColdIron

Enter the details of each contract note with running totals into a spreadsheet as they become available, then when you need the data it is all at your fingertips