CAPITAL GAINS AND SHARES

JJDragonLivigno

Hi,
we have shares we must sell with profit - bought between 1991-2011 - as an employee share plan left in probate.
We have other shares that over a period ranging from 2003-2020 have lost money.
I need to ask:

1. Putting shares into someone else's name is the same as selling for capital gains purposes?
2. to calculate loss/profit for capital gains - would be a total of total spent over that time (2003-2011), plus costs in buying/drip scheme tax etc - minus value now which if there is a loss will be a negative value. Can the whole negative total be put against the profit of those being sold (in the employee share plan) to negate the capital gains to be paid - or only part?
3. Is there a limit to how much you can optimise your capital gains tax due by selling/renaming shares that have made a loss? (knowing that any shareholder must declare to tax)
4. If shares are put in someone else's name - do they have to pay any form of tax other than any normal dividends they must declare?

thanks for any help,
JJ

EthicsGradient

When you say "an employee share plan left in probate" do you mean that you are administering an estate, or that you are a beneficiary of a will?

Vortigern

If you're administering a deceased estate, you don't need to know the acquisition cost of the shares. All you need is their value at the date of death. The gains(or losses) you need to measure are those arising after the date of death.

https://www.gov.uk/government/publications/death-personal-representatives-and-legatees-hs282-self-assessment-helpsheet/hs282-death-personal-representatives-and-legatees-2021

eskbanker

CGT liabilities effectively expire on death:

https://www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/calculating-and-paying-tax-after-someone-dies

Is there Capital Gains Tax to pay on the estate?

The good news is that the estate doesn’t have to pay any Capital Gains Tax on the property or assets that weren’t sold (also known as ‘unrealised gains’) before the person died.

But, if the property or asset is sold during probate and its value rose since the person died, there is usually Capital Gains Tax to pay.

This tax is calculated on how much the increase is since the person’s death.

Beneficiaries inherit the assets at their probate value.

This means that when they sell or give the asset away, they will pay Capital Gains Tax on the increase in value from when the person died to when it was sold or given away.

JJDragonLivigno

Employee plan share of a deceased estate - we need to sell them and offset the profit made since their death and them being put in the beneficiary's name with capital gains losses of shares also in the beneficiaries name - hence the question,
thanks,
JJ

JJDragonLivigno

I am only talking about shares in the beneficiary's name since inheritance - other shares were already in the persons' name. so the fact that they employee share plan shares were part of an inheritance is besides the point - the question is all to do with offsetting capital gains against capital losses.
thanks,
JJ

jimjames

It's still not very clear. As per the previous replies there is no CGT on estates but you appear to be asking about the CGT due once they're transferred to the new beneficiary. Any gains or losses before that date are irrelevant so you just need to calculate the gain or loss at that point but again only if they actually sell them. Losses can cancel out gains if the disposals are made in the same year. What date did they receive the shares?

eskbanker

JJDragonLivigno said:

we have shares we must sell with profit - bought between 1991-2011 - as an employee share plan left in probate.
We have other shares that over a period ranging from 2003-2020 have lost money.
I need to ask:

1. Putting shares into someone else's name is the same as selling for capital gains purposes?
2. to calculate loss/profit for capital gains - would be a total of total spent over that time (2003-2011), plus costs in buying/drip scheme tax etc - minus value now which if there is a loss will be a negative value.

Reassured that it's not just me who's confused, but going back to the OP, is this saying that the inherited shares were all acquired by their original holder between 1991 and 2011, while the beneficiary also acquired other shares (in the same company?) directly from 2003 onwards?

If so, then from the beneficiary's perspective, the inherited shares are valued at the date of death for CGT purposes, and the shares they'd owned all along are valued in the usual way, i.e. based on actual acquisition costs - the distinction between 2011 and 2020 for this pot isn't particularly obvious from the above so it would be helpful to clarify.

Any CGT liability will be calculated based on both losses and gains crystallised in the same tax year, so disposals can be staged to optimise this.

Vortigern

In your earlier thread you said:

I am helping my mother with my fathers estate which is awaiting probate.

He had shares in a company for which he worked – partly given as a bonus each year and partly bought.  We have yet to receive a statement of account to show us when these were bought but I am pretty certain they have a net loss compared to when he received/bought them.  They were all declared on his annual tax form.  Mum needs to sell them.

Have those shares risen in value by more than £12,300 since the date of your father's death? If so, your mother may have to pay CGT when she sells them.

What are the other shares which may have to be sold at a loss?

Did your father transfer these shares to mum before he died? In this case you would have to work out your father's total cost of acquisition and subtract this from the sale value to work out her gain/loss. A loss could be set against other gains to reduce CGT.

As stated previously: You don't make a loss, or a gain, until the shares are sold.

It's also worth noting that CGT can be avoided by selling the shares in batches, some in this tax year and some in the next, thus using two years CGT allowance.

JJDragonLivigno

The shares that my father had in an employee share plan - have risen a lot since his death. My mother is the beneficiary but they cannot be put in her name - she must sell before the 3 years is up.
She has other shares in lots of other companies that over their lifetime - have lost value.
My idea was for her to sell/put in someone else's name(so like selling) and the loss and costs of these put against the capital gains made from my fathers employee share plan shares.
Does this make more sense?
I have thought of splitting the the sale of the shares but it won't actually help that much as she has already used a lot of her capital gains quota for this tax year.  Hence the thought of optimising the estate by putting the shares in he heirs names - making a loss on them and offsetting the losses against the gains on my fathers shares which must be sold her her - the original beneficiary - and put on her tax form and capital gains.
thanks,
JJ

JJDragonLivigno

I do understand that and sales - incurring gains/losses must be done in the same tax year for this to work.
JJ