Sold shares in a spanish account: is it a capital gains tax or foreign income tax?

spaniardclimber

Hi!

I bought and sold shares in 2021 from my Spanish account in Euros (I'm UK resident), I was going to do the self assessment tax return but I'm not sure if this has to be declared as "Tax on foreign income" or as "Capital Gains Tax"?

The ammount of tax I have to pay varies massively between both options.

Many thanks.

[Deleted User]

It’s capital gains - actually foreign capital gains to be completed in the ‘foreign’ section of the return.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1062227/sa106-2022.pdf

spaniardclimber

Ok thanks, if I do it that way it turns out I have to pay almost 50% in taxes even if the ammount is well under my tax allowance. Is that expected or am I doing something wrong?

Jeremy535897

You could be doing all sorts of things wrong. What exchange rates are you using? you need to compare the sterling equivalent of the purchase price with the sterling equivalent of the sale price. In the unlikely event that any Spanish tax is payable, you need to account for that.

spaniardclimber

The net gain is around 4k, for which I have to pay 2.5k in taxes which seems a lot to me as I haven't used my capital gains tax allowance.

I'm probably going to get a tax advisor..

Jeremy535897

If your gain, calculated as I set out earlier, is only £4,000, why do you think you need to pay any tax?

spaniardclimber

I read I had to inform hmrc even if the amount to pay is zero…I just checked and this is the guideline:

You still need to report your gains in your tax return if both of the following apply:

• the total amount you sold the assets for was more than 4 times your allowance
• you’re registered for Self Assessment

I wasn’t registered for self assessment…so then I shouldn’t report it??

Jeremy535897

Not if the gain, together with any other net gains, calculated in accordance with UK law, does not exceed £12,300.

[Deleted User]

Where on earth on the return is this being entered to result in £2500 tax on a £4000 Capital Gain?

spaniardclimber

[Deleted User] said:

Where on earth on the return is this being entered to result in £2500 tax on a £4000 Capital Gain?

I entered it in a couple of foreign gains and both gave the same result...

Jeremy535897

The maximum rate of UK capital gains tax payable on a capital gain that is not on residential property is 20%.