When will any changes in Capital Gains Tax take effect?

Nova1307

DRS1 said:

Nova1307 said:

DRS1 said:

JeffMinter said:

I can negate my CGT gains with losses, right? So if I made a £1k profit from company A shares, but sold company B shares at a £1k loss, would that mean 0 with regards to Capital gains?

Yes but it will be interesting to see what happens where you make the gains  and the losses either side of 30 October especially where the losses do not fully offset the gains.  How will they decide which side of the line the aggregate gain falls?

The gain crystalises at the point you sell the shares. It doesn't matter if most of the gain was accrued pre October 30th. It's all unrealised until the sale is executed. 

I keep screenshots of share trades from the Trading212 app which shows exactly the date and time of the trade and the number of shares traded and price.

What I had in mind was something like this.  I sell shares before 30 October and make a gain of £10k and a loss of £6K so pre 30 October gain is £4k.  Then I sell more shares after 30 October and make a gain of 10K and no losses so post 30 October gain is £10k  Total gain for the year is £14K  less £3K gives chargeable gain of £11K.  What rate(s) apply to the £11K?  Is it 28% on 10K and 20% on £1k?  Or can I put more of the £3K allowance against the post 30 October gain?  If I apportion it is it time based or gain based eg 10/14 x £3k to set against the 10K gain post 30 October?
These are of course figures I have just made up!

I'm not a tax advisor and can't advise you on that but what I do know is that you have to report individual gains/losses in the CGT section of your tax return and enter the date on which the gain/loss was realised. I would guess that HMRC's software would then apply the correct CGT rate depending on the date the shares were sold but perhaps someone else can clarify that. 

EthicsGradient

DRS1 said:

Nova1307 said:

DRS1 said:

JeffMinter said:

I can negate my CGT gains with losses, right? So if I made a £1k profit from company A shares, but sold company B shares at a £1k loss, would that mean 0 with regards to Capital gains?

Yes but it will be interesting to see what happens where you make the gains  and the losses either side of 30 October especially where the losses do not fully offset the gains.  How will they decide which side of the line the aggregate gain falls?

The gain crystalises at the point you sell the shares. It doesn't matter if most of the gain was accrued pre October 30th. It's all unrealised until the sale is executed. 

I keep screenshots of share trades from the Trading212 app which shows exactly the date and time of the trade and the number of shares traded and price.

What I had in mind was something like this.  I sell shares before 30 October and make a gain of £10k and a loss of £6K so pre 30 October gain is £4k.  Then I sell more shares after 30 October and make a gain of 10K and no losses so post 30 October gain is £10k  Total gain for the year is £14K  less £3K gives chargeable gain of £11K.  What rate(s) apply to the £11K?  Is it 28% on 10K and 20% on £1k?  Or can I put more of the £3K allowance against the post 30 October gain?  If I apportion it is it time based or gain based eg 10/14 x £3k to set against the 10K gain post 30 October?
These are of course figures I have just made up!

I suspect that you would be able to apply the £3k allowance where it helps you the most, ie in the post-October period (ie 4k taxed at 20%, (10k-3k)=7k taxed at 24% (the higher rate for shares CGT has gone up to 24%, not 28%, so it matches the property rate). There was a mid-year change in CGT rates in 2010, I think, and I seem to remember seeing a worked example from then in which the allowance was used to the best advantage of the taxpayer. I'll see if I can find it again.

This may have been it - it does seem to say that, anyway (the background is that up to June 2010, all CGT was at 18%; after the emergency Budget, high rate payers paid at 28%):

Example 1
In 2010-11 X's taxable income, after all allowable deductions and the personal allowance, is £27,400. The upper limit of the income tax basic rate band is £37,400. X sells an asset in May 2010 and realises a chargeable gain of £17,000. In November 2010 X sells another asset, realising a chargeable gain £25,100. X has no allowable losses to set against these gains, and the AEA for 2010-11 is £10,100. Neither of the gains qualifies for entrepreneurs' relief.
X's taxable income is £10,000 less than the upper limit of the basic rate band (£37,400 - £27,400). X sets the AEA against the later gain (because part of that gain is liable to tax at the higher CGT rate), leaving £15, 000 taxable (£25,100 - £10,100). The first £10,000 of the £ 15,000 is taxed at 18 per cent and the remaining £5,000 is taxed at 28 per cent. The £17,000 chargeable gain X realised in May 2010 before the change of rates on 23 June 2010 is taxable at the old 18 per cent rate.

BN20 CAPITAL GAINS TAX: RATES AND ENTREPRENEURS' RELIEF | Croner-i Tax and Accounting

aroominyork

artyboy said:

dunstonh said:

TBC15 said:

For the hard of thinking, will my UTs I sold in late April this year be subject to 10% or 18% CGT?

Trades made today onwards would be.  Trades made yesterday or earlier would not be.

Let's see if a glass/vat of wine will change my immediate desire to quit this manky little island for good... as if Brexit wasn't reason enough...

From a purely financial, non-political, money saving perspective, I wonder how much of the financial events of recent years can be attributed to Brexit. 

John464

If you are seriously thinking of going abroad due to the increase in Capital Gains Tax where would you go?
'The big Continental economies – France, Germany, Italy, Spain, have CGT rates more-or-less equal to income tax rates.'
https://taxpolicy.org.uk/2024/02/28/oecd_cgt/
I am going to be hammered by the increases in CGT and resent it being taxed like income when most of the supposed capital gain is just inflation - not a real gain.  Being taxed on this non-existent gain is unfair and discourages investment and growth.
But also unfair is that its easy for wealthy business owners to call their income capital gains to pay a lower rate of tax.  As in Director's share options etc

EthicsGradient

DRS1 said:

Nova1307 said:

DRS1 said:

JeffMinter said:

I can negate my CGT gains with losses, right? So if I made a £1k profit from company A shares, but sold company B shares at a £1k loss, would that mean 0 with regards to Capital gains?

Yes but it will be interesting to see what happens where you make the gains  and the losses either side of 30 October especially where the losses do not fully offset the gains.  How will they decide which side of the line the aggregate gain falls?

The gain crystalises at the point you sell the shares. It doesn't matter if most of the gain was accrued pre October 30th. It's all unrealised until the sale is executed. 

I keep screenshots of share trades from the Trading212 app which shows exactly the date and time of the trade and the number of shares traded and price.

What I had in mind was something like this.  I sell shares before 30 October and make a gain of £10k and a loss of £6K so pre 30 October gain is £4k.  Then I sell more shares after 30 October and make a gain of 10K and no losses so post 30 October gain is £10k  Total gain for the year is £14K  less £3K gives chargeable gain of £11K.  What rate(s) apply to the £11K?  Is it 28% on 10K and 20% on £1k?  Or can I put more of the £3K allowance against the post 30 October gain?  If I apportion it is it time based or gain based eg 10/14 x £3k to set against the 10K gain post 30 October?
These are of course figures I have just made up!

Thinking about this more, the sentence just before what I earlier quoted was 
"In working out the CGT payable, taxpayers will be able to deduct losses and the AEA in the way which minimises the tax due."
Now that's an (old) tax adviser's page, not HMRC, so may not be completely accurate, but if it is, then you might be able to use pre-Budget losses to offset post-Budget gains, even if you also made pre-Budget gains - as in your example. The calculation could then be:
post-Budget gain £10k
subtract £3k annual allowance: £7k remaining.
offset loss of £6k against this (even though this was made pre-Budget)
£1k post-budget gain remaining, taxed at 24% = £240 tax
pre-Budget gain of £10k taxed at 20% = £2000 tax
total tax £2,240

Do people think HMRC would calculate it that way?

masonic

EthicsGradient said:

Do people think HMRC would calculate it that way?

HMRC ask us to do the calculations. We just need to do them in a manner consistent with the rules.

I can't see anything so far that would preclude the computation method you outline.

EthicsGradient

masonic said:

EthicsGradient said:

Do people think HMRC would calculate it that way?

HMRC ask us to do the calculations. We just need to do them in a manner consistent with the rules.

I can't see anything so far that would preclude the computation method you outline.

Well, sort of; they ask us to list all gains and losses, with dates for them (and losses can include those unused in previous years as well), and give a net total gain amount. But there's no suggested way of calculating the exact tax payable, and apart from 2010, I'm not sure if there's a recent time where the time of the tax year in which a gain happened would make a difference (if anyone did a self-assessment CG return in 2010-11, it'd be interesting). Until we see the return and guidance for this tax year, we don't know exactly how the calculation goes. I may post on the HMRC forum to see if I can get a comment from one of  them.

phlebas192

It will be good to see the details once they are fully known. Most of my taxable gains/losses are from an investment club I'm in and normally all I would do in the SA is give the net amount with a "see attached Form 185 for details" comment. But that won't work if the date of disposal within the tax year actually matters!

EthicsGradient

Ah - an HMRC example with different types of gains (10k residential property, and 15 k listed shares) that are charged at different rates, and losses (5k "other assets"). It does use the principle of "allocating losses in the most beneficial way".

Because the gains on residential property are potentially chargeable at higher rates the £5,000 losses would be allocated against these gains.

£5,000 of the annual exempt amount would be allocated against the remaining gains on residential property leaving a balance of £6,700 to be allocated against the gains on listed shares.

The net chargeable gains would be charged at 10% to the extent that any basic rate band remains available (see CG21000 onwards) and any excess at 20%.

CG21520 - Individuals: losses: Relief for losses: examples 1 to 5 - HMRC internal manual - GOV.UK

So I reckon the losses, whenever they happened, will be applied first against gains after the Budget which are subject to the higher rate.

DRS1

From the policy paper on the changes to CGT rates:
"The existing provisions under which losses, the Annual Exempt Amount and any unused income tax basic rate band can be used in the most beneficial way will remain in place, with amendments to reflect the changed rates."