Capital gains tax on share sale question

jonnywells

I am struggling to get my head around CGT on share sales.
I have shares in a company which I have brought over many years a varying prices. So as an example lets say they costs of £50,000 and are now worth £150,000. I don't want to sell the whole holding, can I just sell the CGT allowance of £12,300 say each tax year (as longs they are still in profit) without reporting it to HMRC?

vacheron

If you bought for a total of £50,000 and they are now worth £150,000 you are considered to have made an average of a 200% gain on each share. 

As the CGT allowance is only on the "gain" of the shares, you could sell £18,450 worth of shares each tax year (of which £12,300 would be the gain.... although I  personally wouldn't cut it quite this close just in case), and not be leigible to pay any CGT providing this is the only capital gain disposal you make in that tax year.  

lr1277

I think I have read in terms of calculating CGT, you need to consider your most recent purchase price for the buy price and obviously your sold price, i.e. Last in First out.

Say you bought shares in 2015 at £5 each.

Then in 2017 you bought more shares at £6.50 each.

When selling, you should base your CGT calculation first on the £6.50 shares and then when you have used up the shares in that batch, then consider the shares in the £5 batch.

Not sure about this, so perhaps another poster can advise. Or you can get professional advice.

Jeremy535897

lr1277 said:

I think I have read in terms of calculating CGT, you need to consider your most recent purchase price for the buy price and obviously your sold price, i.e. Last in First out.

Say you bought shares in 2015 at £5 each.

Then in 2017 you bought more shares at £6.50 each.

When selling, you should base your CGT calculation first on the £6.50 shares and then when you have used up the shares in that batch, then consider the shares in the £5 batch.

Not sure about this, so perhaps another poster can advise. Or you can get professional advice.

No. See https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2020

jonnywells

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

vacheron said:

If you bought for a total of £50,000 and they are now worth £150,000 you are considered to have made an average of a 200% gain on each share. 

As the CGT allowance is only on the "gain" of the shares, you could sell £18,450 worth of shares each tax year (of which £12,300 would be the gain.... although I  personally wouldn't cut it quite this close just in case), and not be leigible to pay any CGT providing this is the only capital gain disposal you make in that tax year.  

How did you come up with the £18,450? Maybe if you can show how you calculated it

[Deleted User]

jonnywells said:

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

vacheron said:

If you bought for a total of £50,000 and they are now worth £150,000 you are considered to have made an average of a 200% gain on each share. 

As the CGT allowance is only on the "gain" of the shares, you could sell £18,450 worth of shares each tax year (of which £12,300 would be the gain.... although I  personally wouldn't cut it quite this close just in case), and not be leigible to pay any CGT providing this is the only capital gain disposal you make in that tax year.  

How did you come up with the £18,450? Maybe if you can show how you calculated it

£18450. 

On your example you are achieving a selling price of £3 for every £1 cost price. Selling shares worth £18450 would mean that they cost £6150 - a gain of £12300.

[Deleted User]

jonnywells said:

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

This is something I been struggling to understand myself, but I think you basically ignore the individual prices and use something called the weighted average cost price.  This is achieved by dividing the total amount invested by the acquired total number of shares/units in your investment.  This will become your cost price for each share/unit.  

When you sell, you take the number of shares and multiply this by the average cost and subtract the amount from the same number of shares multiplied by the selling price.  

I think that's the way it  works. but not sure, so I'll be grateful if someone can confirm or explain further.

[Deleted User]

[Deleted User] said:

jonnywells said:

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

This is something I been struggling to understand myself, but I think you basically ignore the individual prices and use something called the weighted average cost price.  This is achieved by dividing the total amount invested by the acquired total number of shares/units in your investment.  This will become your cost price for each share/unit.  

When you sell, you take the number of shares and multiply this by the average cost and subtract the amount from the same number of shares multiplied by the selling price.  

I think that's the way it  works. but not sure, so I'll be grateful if someone can confirm or explain further.

Never called it that but sounds just fine.

2000 shares cost £1 = 2000
4000 shares cost £1.25 = 5000
2000 shares cost £2.50 = 5000

Total 6000 shares cost 12000 or £2 each. 

This ignores dealing and duty costs of course and assumes all in S104 pool.

[Deleted User]

[Deleted User] said:

[Deleted User] said:

jonnywells said:

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

This is something I been struggling to understand myself, but I think you basically ignore the individual prices and use something called the weighted average cost price.  This is achieved by dividing the total amount invested by the acquired total number of shares/units in your investment.  This will become your cost price for each share/unit.  

When you sell, you take the number of shares and multiply this by the average cost and subtract the amount from the same number of shares multiplied by the selling price.  

I think that's the way it  works. but not sure, so I'll be grateful if someone can confirm or explain further.

Never called it that but sounds just fine.

2000 shares cost £1 = 2000
4000 shares cost £1.25 = 5000
2000 shares cost £2.50 = 5000

Total 6000 shares cost 12000 or £2 each. 

This ignores dealing and duty costs of course and assumes all in S104 pool.

I think you mean 8000 shares at 12000 = 1.50. ?? As a novice, just trying to be sure in case I missed something.  Can you please explain what you mean by S104 pool?  

[Deleted User]

purdyoaten2 said:

[Deleted User] said:

jonnywells said:

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

This is something I been struggling to understand myself, but I think you basically ignore the individual prices and use something called the weighted average cost price.  This is achieved by dividing the total amount invested by the acquired total number of shares/units in your investment.  This will become your cost price for each share/unit.  

When you sell, you take the number of shares and multiply this by the average cost and subtract the amount from the same number of shares multiplied by the selling price.  

I think that's the way it  works. but not sure, so I'll be grateful if someone can confirm or explain further.

Never called it that but sounds just fine.

2000 shares cost £1 = 2000
4000 shares cost £1.25 = 5000
2000 shares cost £2.50 = 5000

Total 6000 shares cost 12000 or £2 each. 

This ignores dealing and duty costs of course and assumes all in S104 pool.

Hi,

correction:

Total 8000 shares cost 12000 or £1.50 each.

You then decide to sell 4000 shares (which cost you £6000) for £2 each and receive £8000, so gain £2000.

[Deleted User]

[Deleted User] said:

purdyoaten2 said:

[Deleted User] said:

jonnywells said:

Still struggling to get my head around this. Tried the calculator on the HMRC website but get stuck when i get asked what figure I paid for them as there was lots of different prices.
Is there any other calculators out there I can try? 

This is something I been struggling to understand myself, but I think you basically ignore the individual prices and use something called the weighted average cost price.  This is achieved by dividing the total amount invested by the acquired total number of shares/units in your investment.  This will become your cost price for each share/unit.  

When you sell, you take the number of shares and multiply this by the average cost and subtract the amount from the same number of shares multiplied by the selling price.  

I think that's the way it  works. but not sure, so I'll be grateful if someone can confirm or explain further.

Never called it that but sounds just fine.

2000 shares cost £1 = 2000
4000 shares cost £1.25 = 5000
2000 shares cost £2.50 = 5000

Total 6000 shares cost 12000 or £2 each. 

This ignores dealing and duty costs of course and assumes all in S104 pool.

Hi,

correction:

Total 8000 shares cost 12000 or £1.50 each.

You then decide to sell 4000 shares (which cost you £6000) for £2 each and receive £8000, so gain £2000.

So let's take this scenario one stage further.  After selling the 4000 shares, you're left with another 4000 shares and they still have a cost price of £1.50.  So, let's say some time later, you buy 2000 shares, at £4.00/share and total cost £8000; you now have a total of 6000 shares.  Total cost invested is now 6000 + 8000 = 14000 for 6000 shares; new average price is therefore .   £2.33 ie 14000/6000  


Can someone please check my logic?