Capital Gains Tax on Share Sales

John464

Wonder if anyone can help me please
I am a basic rate tax payer (pensioner)
But thinking of selling my shares to buy a house
(I should have started an ISA earlier I know, but it didn't seem worth it when there was no tax on dividends, and I wasn't expecting this much capital gain. Better still bought the house sooner but there it is.  I am where I am.  I don't need to know what I should have done in the past.  Just what to do now)
If I sold them all in one go it would create a £200,000 capital gain
Would this put me into the higher rate tax bracket so the capital gain was taxed at 20%?
or would I remain a basic rate taxpayer based on my income so the capital gain was taxed at 10%? 

MX5huggy

You would pay 20% on most of it. 10% on the bit that takes you up earnings of £50270. 

https://www.gov.uk/capital-gains-tax/rates

£12300 you’ll pay nothing on. 

Maybe do half this year and half next tax year?

Toast your good fortune of being an excellent stock picker. 

ColdIron

Stagger the sale over more than 1 year? We are not that far from April. Can you transfer some to a spouse to use their £12,300 Annual Exempt 'allowance'? Would a pension contribution decrease the amount subject to higher rate tax?

John464

MX5huggy said:

Toast your good fortune of being an excellent stock picker. 

Thats down to Buffet - when I heard he had advised his wife to put 90% in the S&P500 I did the same.
(I'm just glad to see how much its risen, but scared to think how much it could fall)

Keep_pedalling

John464 said:

MX5huggy said:

Toast your good fortune of being an excellent stock picker. 

Thats mainly down to Buffet -when I heard he had advised his wife to put 90% in the S&P500 I did the same.
(I'm just glad to see how much its risen, but scared to think how much it could fall)

As you want this for a house purchase, you risk losing more by delaying half the sale until the new financial year than the extra tax you will pay by disposing of it in one go. If the disposal, net of tax, will get you the house you want I would just go for it.

John464

ColdIron said:

Stagger the sale over more than 1 year? We are not that far from April. Can you transfer some to a spouse to use their £12,300 Annual Exempt 'allowance'? Would a pension contribution decrease the amount subject to higher rate tax?

Thanks but I'm single and 67 - bit late for starting another pension, and I already use the £12300 Annual Exempt allowance.  Although my pension is taxed at source I have to do Self Assessment because of dividend income so it wouldn't be any extra work to declare Capital Gains if I went over the allowance. 
(Took me by surprise when George Osborne brought in dividend tax.  Maybe I should have seen it coming because I now see the reason for it with Company Directors paying themselves dividends instead of salary to avoid tax.)

John464

MX5huggy said:

You would pay 20% on most of it. 10% on the bit that takes you up earnings of £50270. 

Is that total earnings?
or earnings over the tax free allowance?

ColdIron

John464 said:

ColdIron said:

Stagger the sale over more than 1 year? We are not that far from April. Can you transfer some to a spouse to use their £12,300 Annual Exempt 'allowance'? Would a pension contribution decrease the amount subject to higher rate tax?

Thanks but I'm single and 67 - bit late for starting another pension, and I already use the £12300 Annual Exempt allowance

No reason not to make pension contributions regardless of the CGT issue. You can contribute £2,880 and HMRC will give you £720. It's all free money

(Took me by surprise when George Osborne brought in dividend tax.  Maybe I should have seen it coming because I now see the reason for it with Company Directors paying themselves dividends instead of salary to avoid tax.)

It took many people by surprise as did Philip Hammond's reduction in the dividend allowance to £2,000. It just reinforces the importance of using any or all of the tax shelters available even if there is no obvious current benefit. There is still scope for dividends to be taxed at the same rate and thresholds as savings and earnings income. See my point above

MX5huggy

John464 said:

MX5huggy said:

You would pay 20% on most of it. 10% on the bit that takes you up earnings of £50270. 

Is that total earnings?
or earnings over the tax free allowance?

Total

So £200k gain minus £12300 = £187700 taxable gain.
Say you get £20k pension gross (you’ve said you’re a basic rate tax payer so more than £12570). 

10% CGT is due on (50270-20000)= 30270 = £3027 tax

20% CGT is due on 187700-30270= 157430 = £31486.

Total CGT = £34513