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Numpty’s guide to CGT

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Comments

  • EdSwippet
    EdSwippet Posts: 1,671 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 15 September at 9:13AM
    VXman said:
    ... If I take out £10K this tax year from a fund that I have added to and withdrawn from over the last 7 years how do I work out what my gains were? 
    The government's own helpsheet lays all of this out in a relatively readable (for the government!) way. The worked example shows exactly how to handle cases of partial sales and periodic purchases.

    Two additional notes. Beware of accumulation fund units. If you hold these outside of a tax shelter (ISA, SIPP) you pay income tax annually on the reinvested but not actually received 'notional' dividends, and you later subtract those 'notional' dividends out for capital gains tax. And, beware any 'equalisation' payments that may have come along with dividends. These are not taxable annually (return of capital) but need to be subtracted from your costs for capital gains tax. The government's example does not cover these wrinkles at all.

  • VXman
    VXman Posts: 661 Forumite
    Sixth Anniversary 500 Posts Name Dropper
    edited 15 September at 10:12AM
    eskbanker said:
    You have to be able to work out the unit acquisition cost, based on all previous transactions for that investment - repeatedly buying and selling within an ISA removes that obligation but if you're doing so in an unwrapped account then you're responsible for keeping records of every single transaction in order to calculate your CGT liability.

    So, unit cost when purchased vs. unit cost when sold X number of units? Just got to work out when those particular units were purchased. (easier said than done)

    As regard 'calculate your CGT liability'  I really do think this kind of stuff should be the responsibility of the HMRC especially when they make the whole tax situation so complicated. And if I get it wrong how do they know - unless they are checking it - in which case they may as well do it themselves to begin with.
  • eskbanker
    eskbanker Posts: 37,927 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    VXman said:
    eskbanker said:
    You have to be able to work out the unit acquisition cost, based on all previous transactions for that investment - repeatedly buying and selling within an ISA removes that obligation but if you're doing so in an unwrapped account then you're responsible for keeping records of every single transaction in order to calculate your CGT liability.
    So, unit cost when purchased vs. unit cost when sold X number of units? Just got to work out when those particular units were purchased. (easier said than done)
    Just to be clear, all holdings of each particular investment must be pooled and the average unit acquisition cost established.

    VXman said:
    As regard 'calculate your CGT liability'  I really do think this kind of stuff should be the responsibility of the HMRC especially when they make the whole tax situation so complicated.
    Not saying your opinion is invalid, but it's not how things work, so it remains your responsibility.

    There's plenty of reading material to assist:

    https://www.gov.uk/capital-gains-tax - overview

    https://www.gov.uk/tax-sell-shares - investment-related guide, including a calculator

    https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual - much more detail....
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