Calculating CGT on share sales
Discussion
Following on from my other post about shipping share certificates around I've started to look at what happens if/when I sell them & thinking about CGT liabilites. I've done some investigation & it seems that basically I've got to calculate the average cost price as they were bought at different times (none have been bought in the last 30 days). In one case this means going back over 35 certificates dating back as far as 1993.
I probably have the tax vouchers to hand somewhere in storage & I can fire up Excel but before I write off a weekend is my understanding of the procedure correct?
I probably have the tax vouchers to hand somewhere in storage & I can fire up Excel but before I write off a weekend is my understanding of the procedure correct?
Tax vouchers won't be relevant so no need to look for those. What you really need are "contract notes" from the original purchases to ascertain the amount actually paid for the shares.
And watch out, if you wind the clock back far enough there are different CGT indexation/pooling rules for different periods of ownership.
https://www.fool.co.uk/investing-basics/how-shares...
As regards the original "cost" of listed shares (i.e. FTSE on the stock exchange as opposed to a private company) if you don't have contract notes you can simply look up the share price on the relevant date if you know the date of acquisition - which may helpfully be shown (approximately) on the share certificate.
And watch out, if you wind the clock back far enough there are different CGT indexation/pooling rules for different periods of ownership.
https://www.fool.co.uk/investing-basics/how-shares...
As regards the original "cost" of listed shares (i.e. FTSE on the stock exchange as opposed to a private company) if you don't have contract notes you can simply look up the share price on the relevant date if you know the date of acquisition - which may helpfully be shown (approximately) on the share certificate.
Worth taking a look at one of the online share CGT calculators like CGTCalculator.com which implement the matching rules and handle the complexities around rights issues / transfers / “bed & breakfast” etc. You just need to list all your acquisitions and disposals in the required spreadsheet format and then copy/paste these in to run the calcs.
awd2000 said:
Worth taking a look at one of the online share CGT calculators like CGTCalculator.com which implement the matching rules and handle the complexities around rights issues / transfers / “bed & breakfast” etc. You just need to list all your acquisitions and disposals in the required spreadsheet format and then copy/paste these in to run the calcs.
Thanks, I'll have a look at that. There are a number of rights issues etc as these are all shares issues as scrip dividends & the like (except for the initial purchase of course). Heigh ho.Hellfire this is a painful process. I've managed to tabulate all of the DRIP/Scrip issues for the holdings in their present form but the problem is that nearly all of the companies have undergone either a sale or a restructuring which resulted in a rights issue or new shares in a different company being issued - sometimes more than once.
As an example Friends Provident gave me some shares ( I think they demutualised), they were bought up by Resolution who issued new shares, they were then bought up by Friends Life (again new shares) & they were bought up by Aviva (new shares again). I know what the equivalent share price of the Aviva shares is but I very much doubt I can go back any futher. Is that good enough for CGT calcultions?
Even stock like BT is proving difficult as they issued new shares in 2001 which breaks the chain back to the initial purchase in the flotation in 1993, although at least they have a web page covering it:
https://www.btplc.com/Sharesandperformance/Shareho...
I'm beginning to think the best way out is to just sell £12k worth each year so I don't have to account for CGT but it will take four years to unwind the problem at that rate & that's assuming no other CGT issues.
As an example Friends Provident gave me some shares ( I think they demutualised), they were bought up by Resolution who issued new shares, they were then bought up by Friends Life (again new shares) & they were bought up by Aviva (new shares again). I know what the equivalent share price of the Aviva shares is but I very much doubt I can go back any futher. Is that good enough for CGT calcultions?
Even stock like BT is proving difficult as they issued new shares in 2001 which breaks the chain back to the initial purchase in the flotation in 1993, although at least they have a web page covering it:
https://www.btplc.com/Sharesandperformance/Shareho...
I'm beginning to think the best way out is to just sell £12k worth each year so I don't have to account for CGT but it will take four years to unwind the problem at that rate & that's assuming no other CGT issues.
Mr Pointy said:
Hellfire this is a painful process. I've managed to tabulate all of the DRIP/Scrip issues for the holdings in their present form but the problem is that nearly all of the companies have undergone either a sale or a restructuring which resulted in a rights issue or new shares in a different company being issued - sometimes more than once.
As an example Friends Provident gave me some shares ( I think they demutualised), they were bought up by Resolution who issued new shares, they were then bought up by Friends Life (again new shares) & they were bought up by Aviva (new shares again). I know what the equivalent share price of the Aviva shares is but I very much doubt I can go back any futher. Is that good enough for CGT calcultions?
Even stock like BT is proving difficult as they issued new shares in 2001 which breaks the chain back to the initial purchase in the flotation in 1993, although at least they have a web page covering it:
https://www.btplc.com/Sharesandperformance/Shareho...
I'm beginning to think the best way out is to just sell £12k worth each year so I don't have to account for CGT but it will take four years to unwind the problem at that rate & that's assuming no other CGT issues.
Hi mate, yes - it is a quagmire of a nightmare! As an example Friends Provident gave me some shares ( I think they demutualised), they were bought up by Resolution who issued new shares, they were then bought up by Friends Life (again new shares) & they were bought up by Aviva (new shares again). I know what the equivalent share price of the Aviva shares is but I very much doubt I can go back any futher. Is that good enough for CGT calcultions?
Even stock like BT is proving difficult as they issued new shares in 2001 which breaks the chain back to the initial purchase in the flotation in 1993, although at least they have a web page covering it:
https://www.btplc.com/Sharesandperformance/Shareho...
I'm beginning to think the best way out is to just sell £12k worth each year so I don't have to account for CGT but it will take four years to unwind the problem at that rate & that's assuming no other CGT issues.
I take it you are establishing your base cost (the purchase price), factoring in reinvested dividends and factoring out dividends drawn and taken.
It may be far less painful to sell within your CGT allowance each year over the next 4 years. This is ridiculous, but truthful.
Eric may have some alternative suggestions (he excels in this field) but apart from the above then taking any CGT hit may not be too bad...
If they cost you £20k (for example) and are now worth £40k then your taxable gain would be c. £8,000 (after your annual allowance).
The tax on this would be £1,600. You could easily spend more than that working out the exact gains to save a few pounds.
It is a shame that you missed out by a few days on last years CGT allowance, but that is done now.
Give me shout if I can be of any further help on this.
Cheers
JulianPH said:
Hi mate, yes - it is a quagmire of a nightmare!
I take it you are establishing your base cost (the purchase price), factoring in reinvested dividends and factoring out dividends drawn and taken.
It may be far less painful to sell within your CGT allowance each year over the next 4 years. This is ridiculous, but truthful.
Eric may have some alternative suggestions (he excels in this field) but apart from the above then taking any CGT hit may not be too bad...
If they cost you £20k (for example) and are now worth £40k then your taxable gain would be c. £8,000 (after your annual allowance).
The tax on this would be £1,600. You could easily spend more than that working out the exact gains to save a few pounds.
It is a shame that you missed out by a few days on last years CGT allowance, but that is done now.
Give me shout if I can be of any further help on this.
Cheers
Thanks JulianPH, I had feared there might not be a shortcut. Most, if not all, of these shares were casual purchases (eg BT, BG, Water, Electricity) not the result of targeted investing so they were pretty much left to get on with it & I always signed up for a DRIP scheme if there was one. I can't complain as they have gained in value over the years.I take it you are establishing your base cost (the purchase price), factoring in reinvested dividends and factoring out dividends drawn and taken.
It may be far less painful to sell within your CGT allowance each year over the next 4 years. This is ridiculous, but truthful.
Eric may have some alternative suggestions (he excels in this field) but apart from the above then taking any CGT hit may not be too bad...
If they cost you £20k (for example) and are now worth £40k then your taxable gain would be c. £8,000 (after your annual allowance).
The tax on this would be £1,600. You could easily spend more than that working out the exact gains to save a few pounds.
It is a shame that you missed out by a few days on last years CGT allowance, but that is done now.
Give me shout if I can be of any further help on this.
Cheers
I struggle to believe that many ordinary people could actually track back through the changes over the last twenty-odd years to arrive at an accurate position. Heavens knows how an executor would get on.
Anyway, I don't have to sell them & I was just trying to tidy up a long neglected area. I think the first thing to do is to get them into a nominee account so I don't have lots of bits of valuable paper lying around & then slowly sell them to consolidate the CGT position. At least I can put the losses on Royal Mail to good use!
Little comfort to the OP, I know, but having been in a less extreme predicament in the past, I now maintain a simple spreadsheet which I update religiously with every capital transaction for a stock. Date, quantum, consideration etc. Possibly it's even worse if you hold accumulation units in funds.
In my experience, nominee accounts aren't a foolproof answer. Brokers merge, get acquired, or you may ditch them. In each case there's a risk losing transaction history.
In my experience, nominee accounts aren't a foolproof answer. Brokers merge, get acquired, or you may ditch them. In each case there's a risk losing transaction history.
JulianPH said:
It may be far less painful to sell within your CGT allowance each year over the next 4 years. This is ridiculous, but truthful.
Absolutely right. Can sidestep a mountain of paperwork.As you probably know, the "gross consideration" threshold for CGT reporting is 4x the annual tax free allowance. So keep within that level while simultaneously having enough feel for the approximate gains to stay within the annual allowance. But if they are old shareholdings then a lot of the sale consideration is likely to be gain.
On the other hand, if you keep the gross consideration (aggregate selling price) under the annual CGT allowance then you have no need to calculate or report anything at all.
You could create for yourself two categories of shareholdings to deal with, an "understood" category" and a "too difficult" category. I'd work through the "understood" ones first with proper calculations for a few years and then hoover up the "too difficult" ones at the end, keeping under reporting limits.
rockin said:
JulianPH said:
It may be far less painful to sell within your CGT allowance each year over the next 4 years. This is ridiculous, but truthful.
Absolutely right. Can sidestep a mountain of paperwork.As you probably know, the "gross consideration" threshold for CGT reporting is 4x the annual tax free allowance. So keep within that level while simultaneously having enough feel for the approximate gains to stay within the annual allowance. But if they are old shareholdings then a lot of the sale consideration is likely to be gain.
On the other hand, if you keep the gross consideration (aggregate selling price) under the annual CGT allowance then you have no need to calculate or report anything at all.
You could create for yourself two categories of shareholdings to deal with, an "understood" category" and a "too difficult" category. I'd work through the "understood" ones first with proper calculations for a few years and then hoover up the "too difficult" ones at the end, keeping under reporting limits.
Calculating such gains can be an absolute nightmare.
Sorry to raise this one again but I cannot believe how hard it is to get simple share price information. I've given up on accurate pricing for most of my shares but if anyone can assist with these four prices I'd be grateful:
All for SSE plc, although the first three were when it was called Scottish Hydro
01/04/1993
30/06/1994
18/12/1998
29/09/2006
The SSE website has a blank page for 'Historic calculator and look-up' so I called the registrar who were spectacularly useless & told me to go to the London Stock Exchange website. On there I don't seem to be able to find a price before April 15th 2014 (5 years). Maybe it's because I'm not a trader but even the HL website can go back 10 years.
All for SSE plc, although the first three were when it was called Scottish Hydro
01/04/1993
30/06/1994
18/12/1998
29/09/2006
The SSE website has a blank page for 'Historic calculator and look-up' so I called the registrar who were spectacularly useless & told me to go to the London Stock Exchange website. On there I don't seem to be able to find a price before April 15th 2014 (5 years). Maybe it's because I'm not a trader but even the HL website can go back 10 years.
OP,
You have my sympathy.
I own shares in a USA HQ'd company where the shares are traded on the NYSE. Recently I decided to sell a tranche of shares so needed to get familiar with UK CGT limits, calculations, reporting requirements etc. I also needed to get a spreadsheet together showing the historical information of all past purchases of shares setting out full details. This took ages partly because I was going back so far into the past and there were a significant number of purchases each year. The details included FX rates UK£/USA$ too. Anyway, I managed to get the spreadsheets done and they are reasonably accurate.
This is all necessary because of UK CGT requirements. You probably know by now that you need to establish a "section 104 holding" so that you can identify to HMRC the accrual cost of acquisition, the actual cost of the sale, and therefore the actual net capital gain, and then any CGT due. Not particularly a straightforward thing to do.
I decided that I would sell sufficient shares so as to not exceed the CGT allowance nor 4 times that amount, so that I have no reporting requirements to HMRC. I considered that if the if the gross proceeds of the sale did exceed 4 times the CGT allowance then the amount of detail that HMRC require to be reported is too complex, or more accurately, it's easy to get the calculation wrong which may lead to all sorts of challenges from HMRC.
Luckily, as I am registered for USA IRS purposes as a Non-resident Alien, the amount realised can be paid to me gross ie there's no liability in the USA for anything like CGT.
Anyway, having done this for 2018/19, I am all set (I think) for a repeat in 2019/20.
R.
You have my sympathy.
I own shares in a USA HQ'd company where the shares are traded on the NYSE. Recently I decided to sell a tranche of shares so needed to get familiar with UK CGT limits, calculations, reporting requirements etc. I also needed to get a spreadsheet together showing the historical information of all past purchases of shares setting out full details. This took ages partly because I was going back so far into the past and there were a significant number of purchases each year. The details included FX rates UK£/USA$ too. Anyway, I managed to get the spreadsheets done and they are reasonably accurate.
This is all necessary because of UK CGT requirements. You probably know by now that you need to establish a "section 104 holding" so that you can identify to HMRC the accrual cost of acquisition, the actual cost of the sale, and therefore the actual net capital gain, and then any CGT due. Not particularly a straightforward thing to do.
I decided that I would sell sufficient shares so as to not exceed the CGT allowance nor 4 times that amount, so that I have no reporting requirements to HMRC. I considered that if the if the gross proceeds of the sale did exceed 4 times the CGT allowance then the amount of detail that HMRC require to be reported is too complex, or more accurately, it's easy to get the calculation wrong which may lead to all sorts of challenges from HMRC.
Luckily, as I am registered for USA IRS purposes as a Non-resident Alien, the amount realised can be paid to me gross ie there's no liability in the USA for anything like CGT.
Anyway, having done this for 2018/19, I am all set (I think) for a repeat in 2019/20.
R.
Morningstar look to have a scrollable chart for SSE going back to the early 90's http://tools.morningstar.co.uk/uk/stockreport/defa...
Failing that, when I was growing up we occasionally had to drag out SEDOL (Stock Exchange Daily Official List) to get gilt prices etc. They don't look that helpful online now https://www.londonstockexchange.com/products-and-s... You might find historic copies of SEDOL or FT in a decent public library with microfiche reader. But I'm out of touch, not having visited a library for decades.......... and it would be another half day out of your life!
I think most UK retail brokers get their datafeed from Thomson Reuters or Bloomberg so you could try them.
Cheeky idea: tell hmrc you're trying to compute CGT liability and can they help with historic prices? I'm sure they would have the data but I've no idea if they have an online help service and if so how many weeks they'd take.
Good luck!
Failing that, when I was growing up we occasionally had to drag out SEDOL (Stock Exchange Daily Official List) to get gilt prices etc. They don't look that helpful online now https://www.londonstockexchange.com/products-and-s... You might find historic copies of SEDOL or FT in a decent public library with microfiche reader. But I'm out of touch, not having visited a library for decades.......... and it would be another half day out of your life!
I think most UK retail brokers get their datafeed from Thomson Reuters or Bloomberg so you could try them.
Cheeky idea: tell hmrc you're trying to compute CGT liability and can they help with historic prices? I'm sure they would have the data but I've no idea if they have an online help service and if so how many weeks they'd take.
Good luck!
millen said:
Morningstar look to have a scrollable chart for SSE going back to the early 90's http://tools.morningstar.co.uk/uk/stockreport/defa...
Thanks, that's brilliant & I've managed to extract the price on days very near to those I wanted.The Leaper said:
I decided that I would sell sufficient shares so as to not exceed the CGT allowance nor 4 times that amount, so that I have no reporting requirements to HMRC. I considered that if the if the gross proceeds of the sale did exceed 4 times the CGT allowance then the amount of detail that HMRC require to be reported is too complex, or more accurately, it's easy to get the calculation wrong which may lead to all sorts of challenges from HMRC.
Yes, I've also decided that the only sensible way forward is to sell off £12k worth per year in order to launder the historical profit & escape the need to actually calculate the CGT liability.I'm amazed the process is so difficult & that even company websites don't have something as simple as their own share price online. For SSE it wouldn't be much more than a 10,000 line spreadsheet & I've built cable schedules bigger than that by hand. It isn't as if I'm doing some complex financial dealing that Gordon Gekko would be impressed by: like millions of other ordinary punters I bought BT, British Gas, Electricity & Water shares when they were privatised & down the years have ended up with a right mix of companies (for instance shares in British Gas have left me with Centrica, National Grid & Shell).
Anyway, everyone says it's a right pain so at least I know I'm not doing anything wrong.
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