tax self assessment - cap gains question

[munky]

It's that time of year again, and the helpline don't have sufficient advisors available to answer a question - can anyone help?

I sold a couple of small shareholdings last tax year, one made a net (after comm) gain of £981 and the other a loss of £3,847. So a net loss. So there's no tax to pay but can the net loss be used to offset cap gains in 2008-09? And if there are none (i.e. if I don't sell anything by April), can it be rolled over to 2009-10? If not then there's not a lot of point even entering them in the return I wouldn't have thought?

cheers!

[Iain328]

munky said:

It's that time of year again, and the helpline don't have sufficient advisors available to answer a question - can anyone help?

I sold a couple of small shareholdings last tax year, one made a net (after comm) gain of £981 and the other a loss of £3,847. So a net loss. So there's no tax to pay but can the net loss be used to offset cap gains in 2008-09? And if there are none (i.e. if I don't sell anything by April), can it be rolled over to 2009-10? If not then there's not a lot of point even entering them in the return I wouldn't have thought?

cheers!

Yes you can register losses. Just fill the details in the form & stick a note in that you want to register a loss.

The way it works is that in the year you make the loss you have to use up your losses BEFORE you start using your CGT allowance.

In subsequent years you can use your CGT allowance first and then use losses you have brought forward

So

In year one you make a £20K gain on one thing and a £20K loss on another - net gain zero. In an ideal world you would say OK I'll use my £9K allowance and £11K of the loss to wipe out the gain & carry £9K of the loss forward to use against future gains - but ya can't do that, you have to use the losses to offset any gains in the year in which they were incurred first. I.e. in effect they take away (or reduce your CGT allowance.

If you have no gains in that particular year then you can carry the lot forward

If you just make a loss in a given year then you can carry that forward & so assuming you had carried forward a £20K loss from a previous year and then in the next year you made a £20K gain you can use your £9K allowance to wipe out part of the gain & then £11K of your brought forward losses to wipe out the gain ....and then carry the remaining £9K forward again to use to offset future gains. As far as I know there is no limit to how far forward you can carry losses & you do not need to keep registering them year on year.

Last time I did it I attached a PDF letter to my electronic filing (I use Taxcalc) but then followed it up with a letter a couple of months later & in due course got a letter back from HMRC confirming that losses were registered.

Edited by Iain328 on Saturday 17th January 16:16

[Eric Mc]

If the overall sales proceeds of all disposed assets are less than £36,800 in the tax year (for 2007/08), and the gains were less than your personal Capital Gains Annual Allowance (£9,200 for 2007/08), you do not have to complete the Capital Gains section of the self assessment tax return - UNLESS you want to log the loss(es) for carry forward for offset against chargeable capital gains in future years.

The numbers for 2008/09 are £38,400 and £9,600 respectively.

[munky]

Super - thanks!

A further question has arisen after completing the return and viewing the calculation. In 07-08 I worked for a partnership and they deducted tax and NI on account. However the calculation on HMRC comes out with higher figures - about £200 for income tax but about £1100 for class 4 NI - what could be the cause of that? Could the partnership admin people have underestimated it?

Secondly but less importantly the calculation asks for several thousand on account for 08-09, but am I right in saying I don't need to pay that if I didn't work for the partnership in 08-09? (all income was PAYE)

thanks!!!

[Vron]

I have just discovered filling in my self assesment that the IR have basically buggered up my tax since I started a new job (PAYE) in 2007 and they are now asking me for several £k's by 31st Jan. I have complained and had a 3 page letter back saying basically yes we (IR) have made a right balls up, can't explain why but pay up anyway by 31st Jan and "I am sure you will be disappointed at the reply" No, I'm not disappointed I am furious. I am now going through the ESC A19 / Reasonable belief route.

I only discovered the IR mistake as I have had to fill in a self assesment for the last 8 years (absolutely no reason why I should). I complained about this years and got a letter in Nov saying I didn't have to fill one in anymore but have to do the 07/08 as I am in "the system". I then got a letter on 13 Dec saying I will have to start doing a self assesment from 08/09!

The IR are a bunch of incompetant tossers.

[Eric Mc]

munky said:

Super - thanks!

A further question has arisen after completing the return and viewing the calculation. In 07-08 I worked for a partnership and they deducted tax and NI on account. However the calculation on HMRC comes out with higher figures - about £200 for income tax but about £1100 for class 4 NI - what could be the cause of that? Could the partnership admin people have underestimated it?

Secondly but less importantly the calculation asks for several thousand on account for 08-09, but am I right in saying I don't need to pay that if I didn't work for the partnership in 08-09? (all income was PAYE)

thanks!!!

In what capacity were you working for the partnership?

i) a PAYE employee?

ii) a partner in the partnership

iii) a self employed contractor?

In what part of the tax return have you entered the partnership income?

The Revenue allows a taxpayer to apply to have the following year's Payments on Account reduced - to nil if appropriate. You need to make the application on a special form SA303 which you ought to be able to download from the HMNRC website. You can also enter the application and reasons for the application when entering the data on the tax return. I always do both as I have found that the Revneue has ALWAYS failed to implement the reductions when the application appeared on the tax return only This may not be an issue with on-line filing as you are, in effect, bypassing the Revenue monkeys and feeding your data directly on to the Revenue's computer system.

You do not need to make payments on account for 2008/09 if:

i) the tax due for the year 2007/08 under Self Assessment is is less than £500

ii) 80% of your tax liabilities gfor 2007/08 were paid through deduction at source (i.e. PAYE, yax deducted by banks on interest etc)

Edited by Eric Mc on Sunday 18th January 08:53

[munky]

Eric Mc said:

munky said:

Super - thanks!

A further question has arisen after completing the return and viewing the calculation. In 07-08 I worked for a partnership and they deducted tax and NI on account. However the calculation on HMRC comes out with higher figures - about £200 for income tax but about £1100 for class 4 NI - what could be the cause of that? Could the partnership admin people have underestimated it?

Secondly but less importantly the calculation asks for several thousand on account for 08-09, but am I right in saying I don't need to pay that if I didn't work for the partnership in 08-09? (all income was PAYE)

thanks!!!

In what capacity were you working for the partnership?

i) a PAYE employee?

ii) a partner in the partnership

iii) a self employed contractor?

In what part of the tax return have you entered the partnership income?

The Revenue allows a taxpayer to apply to have the following year's Payments on Account reduced - to nil if appropriate. You need to make the application on a special form SA303 which you ought to be able to download from the HMNRC website. You can also enter the application and reasons for the application when entering the data on the tax return. I always do both as I have found that the Revneue has ALWAYS failed to implement the reductions when the application appeared on the tax return only This may not be an issue with on-line filing as you are, in effect, bypassing the Revenue monkeys and feeding your data directly on to the Revenue's computer system.

You do not need to make payments on account for 2008/09 if:

i) the tax due for the year 2007/08 under Self Assessment is is less than £500

ii) 80% of your tax liabilities gfor 2007/08 were paid through deduction at source (i.e. PAYE, yax deducted by banks on interest etc)

Edited by Eric Mc on Sunday 18th January 08:53

Thanks Eric, I was a partner in the partnership and I made the application for a nil payment on account for 2008-09 in the online return on the basis that in 2008-09, all tax will be deducted at source. However in 2007-08 less than 80% was deducted at source - does that still mean I have to pay on account?

I'll get an SA303 as well - thanks!