Is Capital Gains Tax due on of inherited shares and divided shares earned from them ?

SharestoSell

Hello

I inherited some shares when my brother died in 2011.  Since then, I have been receiving dividends as extra shares.  I need to sell some of the shares now so will the capital gain be the difference between;

a)      value of the shares when my brother died and the value of the same number of shares on the sale date.   ( ignoring the dividend shares )

b)     value of the shares when my brother died and the value of the all the shares (including the dividend shares) on the sale date

c)      value of the shares when my brother died and the value of the same number of shares on the sale date

Plus, the value of each dividend share when issued and the value at sale.

d)     or something else ?   

I only plan to sell around half of the shares, If the dividend shares are treated differently how do I differentiate ?

Best Regards

Linton

SharestoSell said:

Hello

I inherited some shares when my brother died in 2011.  Since then, I have been receiving dividends as extra shares.  I need to sell some of the shares now so will the capital gain be the difference between;

a)      value of the shares when my brother died and the value of the same number of shares on the sale date.   ( ignoring the dividend shares )

b)     value of the shares when my brother died and the value of the all the shares (including the dividend shares) on the sale date

c)      value of the shares when my brother died and the value of the same number of shares on the sale date

Plus, the value of each dividend share when issued and the value at sale.

d)     or something else ?   

I only plan to sell around half of the shares, If the dividend shares are treated differently how do I differentiate ?

Best Regards

(c) is basically correct

when selling you can use an average cost eg:

 sum of (cost per share bought or acquired X number of shares)/ total number of shares

so you don't link a sale with specific shares.  Each sale is assumed to consist of a balance of all the shares.

SharestoSell

Thanks for the information.  
So if I had taken cash dividends each time I would have benefitted from my tax allowance each year, but it seems now if I sell all the dividend shares I will need to pay CGT on them all .  Is there any way to calculate the CGT that includes the previous years tax allowance ?  
Is there any limit to the number of years this needs to be calculated?  I have had these shares since 2011.

wmb194

SharestoSell said:

Thanks for the information.  
So if I had taken cash dividends each time I would have benefitted from my tax allowance each year, but it seems now if I sell all the dividend shares I will need to pay CGT on them all .  Is there any way to calculate the CGT that includes the previous years tax allowance ?  
Is there any limit to the number of years this needs to be calculated?  I have had these shares since 2011.

You're misunderstanding. The dividend counts as income in the year you received it. That dividend was then used to buy shares. As IanManc writes, you're now trying to work out the capital gain or loss between the purchase price and the sale price.

SharestoSell

Almost there .....
                              thanks for the information so far.
These shares are Prudential (PRU.L), there have been two demergers that I need to include in my calculations.

The first was the PRU/M&G demerger Oct-2019, I found information on their web site to explain how to re-base the share value for this demerger, see:( www.prudentialplc.com/~/media/Files/P/Prudential-V3/content-pdf/demerger-of-mandgplc-base-cost-apportionment-uk-shareholders.pdf ). 

The second demerger was PRU/JXN ( Jackson Financial Inc ) Sept-2021, I can not find any information how to calculate the Capital gains tax (CGT) base cost apportionment for the PRU/JXN demerger.   

Can anyone help ?

thanks. 

wmb194

SharestoSell said:

Almost there .....
                              thanks for the information so far.
These shares are Prudential (PRU.L), there have been two demergers that I need to include in my calculations.

The first was the PRU/M&G demerger Oct-2019, I found information on their web site to explain how to re-base the share value for this demerger, see:( www.prudentialplc.com/~/media/Files/P/Prudential-V3/content-pdf/demerger-of-mandgplc-base-cost-apportionment-uk-shareholders.pdf ). 

The second demerger was PRU/JXN ( Jackson Financial Inc ) Sept-2021, I can not find any information how to calculate the Capital gains tax (CGT) base cost apportionment for the PRU/JXN demerger.   

Can anyone help ?

thanks. 

There wasn't a rebasing for Jackson Financial, its shares were classed as a dividend payment.

https://www.prudentialplc.com/en/investors/shareholder-information/historical-information/demerger-of-jackson#:~:text=Upon%20completion%20of%20the%20proposed,you%20hold%20on%20that%20date.