Understanding Capital Gains Tax

Haddenham35

Hi - looking for some guidance on CGT and how/when it applies, as I've just cashed in some company shares and would like to pay any tax bill now (leaving the remaining amount to put towards our house extension).

The headlines are:

- received the shares in December 2017, but as it's an American company it was held in a Fidelity plan in the US
- I believe these were taxed at the time of receipt but it's a former employer so can't easily check
- at the time of receipt the shares were worth $4068.63
- sold these shares on 25th Nov 2025 for $8640
- works out as a gain of $4,571.37 (£3,415.64 when put through a XE currency converter)

initial questions:

1) am I paying CGT on the total $8640? Or the gain of $4,571?
2) do I get a CGT allowance of £3k that I can factor in?
3) let's say I just owe CGT on the £3,415, could I pay £500 into an ISA to get me under the £3k allowance and therefore not incur an additional tax charge?

any advice or support would be really appreciated.

many thanks

Dazed_and_C0nfused

Haddenham35 said:

Hi - looking for some guidance on CGT and how/when it applies, as I've just cashed in some company shares and would like to pay any tax bill now (leaving the remaining amount to put towards our house extension).

The headlines are:

- received the shares in December 2017, but as it's an American company it was held in a Fidelity plan in the US
- I believe these were taxed at the time of receipt but it's a former employer so can't easily check
- at the time of receipt the shares were worth $4068.63
- sold these shares on 25th Nov 2025 for $8640
- works out as a gain of $4,571.37 (£3,415.64 when put through a XE currency converter)

initial questions:

1) am I paying CGT on the total $8640? Or the gain of $4,571?
2) do I get a CGT allowance of £3k that I can factor in?
3) let's say I just owe CGT on the £3,415, could I pay £500 into an ISA to get me under the £3k allowance and therefore not incur an additional tax charge?

any advice or support would be really appreciated.

many thanks

Someone more knowledgeable on CGT will no doubt be along shortly but the answer to 2) is why wouldn't you?

Is there something you're not telling us, like you aren't UK resident?  Or have other gains that have used the allowance?

3) is a definite no.  Paying money into an ISA will not have any bearing on the amount of the gain that is taxed.

Haddenham35

Dazed_and_C0nfused said:

Haddenham35 said:

Hi - looking for some guidance on CGT and how/when it applies, as I've just cashed in some company shares and would like to pay any tax bill now (leaving the remaining amount to put towards our house extension).

The headlines are:

- received the shares in December 2017, but as it's an American company it was held in a Fidelity plan in the US
- I believe these were taxed at the time of receipt but it's a former employer so can't easily check
- at the time of receipt the shares were worth $4068.63
- sold these shares on 25th Nov 2025 for $8640
- works out as a gain of $4,571.37 (£3,415.64 when put through a XE currency converter)

initial questions:

1) am I paying CGT on the total $8640? Or the gain of $4,571?
2) do I get a CGT allowance of £3k that I can factor in?
3) let's say I just owe CGT on the £3,415, could I pay £500 into an ISA to get me under the £3k allowance and therefore not incur an additional tax charge?

any advice or support would be really appreciated.

many thanks

Someone more knowledgeable on CGT will no doubt be along shortly but the answer to 2) is why wouldn't you?

Is there something you're not telling us, like you aren't UK resident?  Or have other gains that have used the allowance?

3) is a definite no.  Paying money into an ISA will not have any bearing on the amount of the gain that is taxed.

2) was just my lack of knowledge on the subject, I am a UK resident and have no other gains. Just wanted to double check on the allowance point.

NorthYorkie

1) To calculate the gain you need to convert the sales proceeds of $8640 to Sterling at the rate applicable on the date of sale and also convert the $4068 cost at the rate applicable on the date of acquisition (this would be the amount on which you would have been charged income tax at the time).

TMSG

What @NorthYorkie said... I'd just add that you can subtract actual costs incurred, if any. (I learned this the hard way when I did a CGT calculation the way you outlined and HMRC wrote a not overly nice letter re this.)

Haddenham35

Thanks so much for the help. I've run the figures on the specific dates and it looks like the purchase £ price was - £3,042.35 and the £ sale price was - £6,592.91.

so I believe my bill is:

£6,592.91 - £3,042.35 =£3,550.56 
- £3,000 allowance

= £550.56

If anyone could validate my logic that would be really helpful. 

Thank you!

probate_slave

Not quite. £550.56 is the chargeable gain on which CGT is calculated at either 18% or 24% depending on whether you are a basic or higher rate taxpayer.

saajan_12

Haddenham35 said:

3) let's say I just owe CGT on the £3,415, could I pay £500 into an ISA to get me under the £3k allowance and therefore not incur an additional tax charge?
s

No, ISAs don't make taxable money into untaxable. Eg whether the money came from income or capital gains, THAT tax is still payable as normal. 
The only impact of an ISA is that the SUBSEQUENT interest / gains made are tax free. Eg if you put £500 in an ISA, you'd still pay the usual tax on it, but then if it was a 5% cash ISA then in a year, you'd earn £25 interest which is tax free. 

Haddenham35

probate_slave said:

Not quite. £550.56 is the chargeable gain on which CGT is calculated at either 18% or 24% depending on whether you are a basic or higher rate taxpayer.

Understood - thank you!