Custody fees and share dealing charges

TMSG

I have recently opened a non-ISA account with a broker and I now have to prepare the 20/21 tax return. I buy and sell mostly ETFs and bonds. My question is twofold:
1. Can I deduct the quarterly custody fees from the income generated (ie lower my income)?
2. And likewise, can I deduct the dealing charges?

I have googled but haven't found a conclusive answer so I would be v grateful for any help or hints. THX!

Jeremy535897

No deductions like that reduce dividend income. Dealing costs can be deducted from the gains arising from the deals concerned.

TMSG

Thanks for that. I had already read that Dealing costs can be CGT-relevant. So no CGT no deduction. Strange because I do have some costs. Same for the custody fees. Well...

Jeremy535897

Custody fees are just a general cost not attributable to any holding, so cannot be deducted for capital gains tax, and nothing can normally be deducted from dividends.

TMSG

Jeremy535897 said:

Dealing costs can be deducted from the gains arising from the deals concerned.

I assume the word "gains" means that dealing costs CAN'T be deducted if a deal has produced a loss?

Jeremy535897

Dealing costs increase a loss.

TMSG

Jeremy535897 said:

Dealing costs increase a loss.

Yes they do... but is it tax relevant? Perhaps a concrete example can help me to clarify this.

I bought shares A for £1000 and shares B for £1000, each transaction with its own £20 dealing charges. I sell both positions, A for 1100 and B for 990, again £20 dealing charges each.

So on A I made a raw profit of £100 but the charges bring this down to £60. On B I made a loss of £10 and the dealing charges make for a total loss of £50. So the net effect (leaving the CG allowance out of the picture, because this has already been eaten by other transactions) is that I made an overall loss of £50... and have no CGT to pay on those transactions?

Sorry for being so thick, but this tax business is very taxing indeed And thanks for looking into this!

Jeremy535897

You made a profit of £60 and a loss of £50, netting off to a gain of £10, which is because you made £100 less £40 dealing costs on A, and lost £10 plus £40 dealing costs on B. Losses in a tax year are always set against gains of the same year before deducting the annual exemption, so you can end up getting no effective relief for a loss in a year. If you have an overall loss in a tax year, you can carry it forward, and it does not waste the next year's annual exemption.

If you had gains of over £12,300 on other transactions, and no losses brought forward, then you would pay CGT on the £10.

TMSG

Yeah, I messed the calc up. (I set the loss for B originally at £100 and with that I calculated at first. Then I changed the loss to £10 but didn't change the resulting total gain/loss.)

All clear now. Thanks for your patience. Appreciated!