Capital gains tax on shares

plumb1_2

Hi in 2007 when standard life became a plc I received free shares.
I opted for the drip reinvestment plan, so didn’t receive dividend payments.
I am considering selling now and the shares are valued at £7828 as of this morning.
So do I have to pay cgt on the £7828 less any dealing charges? or can I try and find what dividends( reinvested) from 2007 and deduct the amount ?

Jeremy535897

The dividends were income when reinvested, so should have been declared as such, and they are added to the capital gains tax base cost.

plumb1_2

Jeremy535897 said:

The dividends were income when reinvested, so should have been declared as such, and they are added to the capital gains tax base cost.

I never declared any dividends ( my mistake) but they would have been well under the yearly allowance .
So with the dividends being under the allowance since 2007, can I subtract them from the profit, or is that in correct?

[Deleted User]

plumb1_2 said:

Jeremy535897 said:

The dividends were income when reinvested, so should have been declared as such, and they are added to the capital gains tax base cost.

I never declared any dividends ( my mistake) but they would have been well under the yearly allowance .
So with the dividends being under the allowance since 2007, can I subtract them from the profit, or is that in correct?

You add them to the cost thereby reducing the profit. 

Jeremy535897

You would add the actual dividends from 2016, when the tax credit disappeared. Prior to that, you would add the net dividend plus the tax credit.

plumb1_2

Jeremy535897 said:

You would add the actual dividends from 2016, when the tax credit disappeared. Prior to that, you would add the net dividend plus the tax credit.

So if I total all the dividends I received from 2016 (16yrs) and minus that figure which will take me under this year’s allowance £6k. I won’t be liable for cgt and won’t have to report it. Is that correct?

[Deleted User]

plumb1_2 said:

Jeremy535897 said:

You would add the actual dividends from 2016, when the tax credit disappeared. Prior to that, you would add the net dividend plus the tax credit.

So if I total all the dividends I received from 2016 (16yrs) and minus that figure which will take me under this year’s allowance £6k. I won’t be liable for cgt and won’t have to report it. Is that correct?

Indeed. Or you could sell £6000 worth now and the remainder on 6th April 2024 and save yourself the hassle, not withstanding the risk that the share price may fall and any additional dealing charges.

Jeremy535897

You mean all the dividends you received from 2007, not just from 2016.

plumb1_2

Jeremy535897 said:

You mean all the dividends you received from 2007, not just from 2016.

Yes sorry since 2007 🙈

spider42

Jeremy535897 said:

You would add the actual dividends from 2016, when the tax credit disappeared. Prior to that, you would add the net dividend plus the tax credit.

This isn't correct. Pre-2016, the allowable cost on a scrip dividend scheme is the net dividend, before the addition of the tax credit. See https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg58750 (penultimate paragraph).

But Standard Life / Abrdn have a DRIP scheme not a scrip scheme, so the allowable cost is the cost of the shares when the company bought the shares in the market. This will be roughly the same as the net dividend, but will vary slightly due to roundings. They can only purchase whole numbers of shares, so sometimes they might not invest the full dividend, or sometimes they may invest slightly more if there is a small cash balance remaining from the previous reinvestments.

plumb1_2

spider42 said:

Jeremy535897 said:

You would add the actual dividends from 2016, when the tax credit disappeared. Prior to that, you would add the net dividend plus the tax credit.

This isn't correct. Pre-2016, the allowable cost on a scrip dividend scheme is the net dividend, before the addition of the tax credit. See https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg58750 (penultimate paragraph).

But Standard Life / Abrdn have a DRIP scheme not a scrip scheme, so the allowable cost is the cost of the shares when the company bought the shares in the market. This will be roughly the same as the net dividend, but will vary slightly due to roundings. They can only purchase whole numbers of shares, so sometimes they might not invest the full dividend, or sometimes they may invest slightly more if there is a small cash balance remaining from the previous reinvestments.

Thanks for the reply dividends were from 2007, don’t know why I get putting 2016?
still can’t get my head around it (doh)
I am coming upto retirement in a few months and trying to minimise the things I have to do and for the DW. So intending to put the money from the sale into my sipp or isa.
I also have a BTL that I will hopefully will be selling next tax year if the long term tenants move out.it would have been better to sell last year regarding the £12k CGT relief. But they are nice people and wouldn’t dream of evicting them, so will have to live with the extra cgt I will have to pay.
Anyway back to these shares, I’d like to sell them in one go, and pay as little as possible or no cgt.
so far thanks for the replies even though I don’t understand them 😂