Capital gains tax on share sale

pumas

Partner started with 1000 shares and over the years took more shares in lieu of dividends. I don't have any record of when they were acquired or the 'cost'. 
The statements show the total value of the shares, but how is the CGT calculated if sold and worse still only some of them?

Woodstok2000

The broker should have all the info you need, but you can work it out yourself.

You should have paid tax on those shares as income when they were taken in lieu of dividends, if it was over £500. That taxable value is the value you use for the shares. Look back at tax returns/payslips, Google and/or the company should be able to advise when dividends were paid. If under £500 you'd just use the total value of the dividend shares.

When selling, as long as youve held the shares longer than 30 days, you need to total up the value of all shares based on when they were acquired, then divide by the total number of shares to get an average price per share. That's the price used to calculate any capital gains.

For example:

Purchase 100 shares at £1 each
Then purchase 100 shares at £2 each
200 shares for £300 = £1.50 per share

Sell 100 shares, the cost for capital gains purposes is £150.

Don't forget to take off allowable expenses (e.g brokers fees) and that you get £3k allowance before cgt is due.

wmb194

Woodstok2000 said:

The broker should have all the info you need, but you can work it out yourself.

You should have paid tax on those shares as income when they were taken in lieu of dividends, if it was over £500. That taxable value is the value you use for the shares. Look back at tax returns/payslips, Google and/or the company should be able to advise when dividends were paid. If under £500 you'd just use the total value of the dividend shares.

When selling, as long as youve held the shares longer than 30 days, you need to total up the value of all shares based on when they were acquired, then divide by the total number of shares to get an average price per share. That's the price used to calculate any capital gains.

For example:

Purchase 100 shares at £1 each
Then purchase 100 shares at £2 each
200 shares for £300 = £1.50 per share

Sell 100 shares, the cost for capital gains purposes is £150.

Don't forget to take off allowable expenses (e.g brokers fees) and that you get £3k allowance before cgt is due.

Re brokers' fees, to be specific these have to be fees directly related to the transaction i.e. broker commission when buying and selling the shares. Ongoing general account fees are not allowable. Stamp duty is also an allowable cost.

pumas

Further digging required, broker has changed twice.

I don't have shares so clueless, the following is interesting,
...You should have paid tax on those shares as income when they were taken in lieu of dividends, if it was over £500. That taxable value is the value you use for the shares. Look back at tax returns/payslips, Google and/or the company should be able to advise when dividends were paid. If under £500 you'd just use the total value of the dividend shares....

Woodstok2000

pumas said:

Further digging required, broker has changed twice.

I don't have shares so clueless, the following is interesting,
...You should have paid tax on those shares as income when they were taken in lieu of dividends, if it was over £500. That taxable value is the value you use for the shares. Look back at tax returns/payslips, Google and/or the company should be able to advise when dividends were paid. If under £500 you'd just use the total value of the dividend shares....

Yep, dividends are treated as income, and so are shares taken in lieu of dividends. The tax rate is different to income tax, and you do have the £500 annual allowance so it may not be applicable in your case.

eskbanker

pumas said:

Further digging required, broker has changed twice.

I don't have shares so clueless, the following is interesting,
...You should have paid tax on those shares as income when they were taken in lieu of dividends, if it was over £500. That taxable value is the value you use for the shares. Look back at tax returns/payslips, Google and/or the company should be able to advise when dividends were paid. If under £500 you'd just use the total value of the dividend shares....

The dividend allowance for income tax purposes is indeed £500, but only since the 2024/25 year - it used to be £2K so that'll probably be relevant for most past years:

Tax year	Dividend allowance
6 April 2024 to 5 April 2025	£500
6 April 2023 to 5 April 2024	£1,000
6 April 2022 to 5 April 2023	£2,000
6 April 2021 to 5 April 2022	£2,000

https://www.gov.uk/tax-on-dividends

Without knowing exactly how the 'shares in lieu of dividends' arrangement applied to your partner's situation, it's normally seen as dividend reinvestment, i.e. receiving the dividend income and then using it to buy shares, effectively two transactions, which is perhaps a clearer way of looking at it when considering both income tax and CGT?

DRS1

How are the shares held?  Do you have paper certificates?  Or are they held with a broker in electronic form?

If they are paper certificates then you will probably find more certificates for each dividend reinvestment and with those certificates should be a paper saying how much has been spent on buying the shares (the dividend doesn't always buy a whole number of shares so the dividend and the purchase price of the shares won't always be the same).  Often the dividend which can't be spent at the time is carried over to the next dividend and spent then.

If they are held electronically then there should be a share history somewhere on the brokers site showing the original 1000 shares and then any subsequent additions and the cost of those additional shares.  Sometimes you get there by clicking on the holding in the portfolio summary.

If you name the shares and the broker (if any) then someone may be able to help with where to look.

TooConfusing

Just linking into this and reaching out for some advice as I have conflicting information (even tried HMRC but the call handler didn't sound too sure and that info seems to conflict other details that I have read) - Hoping someone on here may know.

If someone does not have any taxable income in the 2025/26 tax year and wants to dispose of some shares, how does this work in terms of allowances? Is CGT a totally separate allowance and so anything over £3000 gain needs to be taxed? OR Is CGT in addition to income tax allowance, and therefore £15k gain can be made prior to being taxed (the £12k income tax allowance and £3k CGT allowance)?  

Any help would be great as I can't seem to get a clear answer anywhere

eskbanker

TooConfusing said:

If someone does not have any taxable income in the 2025/26 tax year and wants to dispose of some shares, how does this work in terms of allowances? Is CGT a totally separate allowance and so anything over £3000 gain needs to be taxed? OR Is CGT in addition to income tax allowance, and therefore £15k gain can be made prior to being taxed (the £12k income tax allowance and £3k CGT allowance)?  

CGT and income tax are separate and the allowances aren't interchangeable or combinable, so any capital gain over £3K incurs tax (even though the rate paid is influenced by income tax band).  If you need to discuss any further then it would be better to do so in a separate thread, as your issue is only tangentially related to this thread's topic.