CGT reporting obligations (not property related)
Discussion
One for the tax specialists...
With the allowance already down to £6,000 (reducing again to £3,000 next year), many more folk will be potentially exposed to CGT.
Take the example of the partial disposal of a shareholding that has been allowed to accumulate over decades, in certificated form, with incomplete records frustrating any reasonably definitive S104 calc.
Regarding the Self Assessment reporting obligations...
I have seen this...
https://www.gov.uk/capital-gains-tax/work-out-need...
... which tells us...
If your total gains are less than the tax-free allowance_i.e., £6,000 this year
You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.
You still need to report your gains in your tax return if both of the following apply:
[1] the total amount you sold the assets for was more than 4 times your allowance
[2] you’re registered for Self Assessment"
i.e., you may be filing Self Assessment for other reasons but you can leave the CGT section blank if your gains were sub £6k and the total proceeds were below £24k.
I have also seen this...
https://www.gov.uk/government/publications/reducin...
... which may be specifically addressed to Trustees but "fixes the CGT proceeds reporting limit at £50,000" (close to 4 times the old £12,300 allowance).
Has that £50k limit made it into law? Is that the relevant threshold, or is it £24k this year (being 4 x £6,000) referred to above?
I guess the issue is that if one made a disposal of £23,999 (or £49,999) in the current year and said person was of the view that any gain realised was £6,000 (or less), there would be no obligation to include any details of the disposal in their 2023-24 Self Assessment return.
The grey area would appear to be that one would have to be confident that, if challenged, any gain was indeed £6,000 or less, otherwise the reporting obligation would have be triggered.
Any thoughts?
With the allowance already down to £6,000 (reducing again to £3,000 next year), many more folk will be potentially exposed to CGT.
Take the example of the partial disposal of a shareholding that has been allowed to accumulate over decades, in certificated form, with incomplete records frustrating any reasonably definitive S104 calc.
Regarding the Self Assessment reporting obligations...
I have seen this...
https://www.gov.uk/capital-gains-tax/work-out-need...
... which tells us...
If your total gains are less than the tax-free allowance_i.e., £6,000 this year
You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.
You still need to report your gains in your tax return if both of the following apply:
[1] the total amount you sold the assets for was more than 4 times your allowance
[2] you’re registered for Self Assessment"
i.e., you may be filing Self Assessment for other reasons but you can leave the CGT section blank if your gains were sub £6k and the total proceeds were below £24k.
I have also seen this...
https://www.gov.uk/government/publications/reducin...
... which may be specifically addressed to Trustees but "fixes the CGT proceeds reporting limit at £50,000" (close to 4 times the old £12,300 allowance).
Has that £50k limit made it into law? Is that the relevant threshold, or is it £24k this year (being 4 x £6,000) referred to above?
I guess the issue is that if one made a disposal of £23,999 (or £49,999) in the current year and said person was of the view that any gain realised was £6,000 (or less), there would be no obligation to include any details of the disposal in their 2023-24 Self Assessment return.
The grey area would appear to be that one would have to be confident that, if challenged, any gain was indeed £6,000 or less, otherwise the reporting obligation would have be triggered.
Any thoughts?
Mogul said:
One for the tax specialists...
With the allowance already down to £6,000 (reducing again to £3,000 next year), many more folk will be potentially exposed to CGT.
Take the example of the partial disposal of a shareholding that has been allowed to accumulate over decades, in certificated form, with incomplete records frustrating any reasonably definitive S104 calc.
Regarding the Self Assessment reporting obligations...
I have seen this...
https://www.gov.uk/capital-gains-tax/work-out-need...
... which tells us...
If your total gains are less than the tax-free allowance_i.e., £6,000 this year
You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.
You still need to report your gains in your tax return if both of the following apply:
[1] the total amount you sold the assets for was more than 4 times your allowance
[2] you’re registered for Self Assessment"
i.e., you may be filing Self Assessment for other reasons but you can leave the CGT section blank if your gains were sub £6k and the total proceeds were below £24k.
I have also seen this...
https://www.gov.uk/government/publications/reducin...
... which may be specifically addressed to Trustees but "fixes the CGT proceeds reporting limit at £50,000" (close to 4 times the old £12,300 allowance).
Has that £50k limit made it into law? Is that the relevant threshold, or is it £24k this year (being 4 x £6,000) referred to above?
I guess the issue is that if one made a disposal of £23,999 (or £49,999) in the current year and said person was of the view that any gain realised was £6,000 (or less), there would be no obligation to include any details of the disposal in their 2023-24 Self Assessment return.
The grey area would appear to be that one would have to be confident that, if challenged, any gain was indeed £6,000 or less, otherwise the reporting obligation would have be triggered.
Any thoughts?
I'm have been completing SA for many years. In recent years I have been selling a tranche of a large shareholding, always keeping any gain below the CGT allowance for the tax year of sale.With the allowance already down to £6,000 (reducing again to £3,000 next year), many more folk will be potentially exposed to CGT.
Take the example of the partial disposal of a shareholding that has been allowed to accumulate over decades, in certificated form, with incomplete records frustrating any reasonably definitive S104 calc.
Regarding the Self Assessment reporting obligations...
I have seen this...
https://www.gov.uk/capital-gains-tax/work-out-need...
... which tells us...
If your total gains are less than the tax-free allowance_i.e., £6,000 this year
You do not have to pay tax if your total taxable gains are under your Capital Gains Tax allowance.
You still need to report your gains in your tax return if both of the following apply:
[1] the total amount you sold the assets for was more than 4 times your allowance
[2] you’re registered for Self Assessment"
i.e., you may be filing Self Assessment for other reasons but you can leave the CGT section blank if your gains were sub £6k and the total proceeds were below £24k.
I have also seen this...
https://www.gov.uk/government/publications/reducin...
... which may be specifically addressed to Trustees but "fixes the CGT proceeds reporting limit at £50,000" (close to 4 times the old £12,300 allowance).
Has that £50k limit made it into law? Is that the relevant threshold, or is it £24k this year (being 4 x £6,000) referred to above?
I guess the issue is that if one made a disposal of £23,999 (or £49,999) in the current year and said person was of the view that any gain realised was £6,000 (or less), there would be no obligation to include any details of the disposal in their 2023-24 Self Assessment return.
The grey area would appear to be that one would have to be confident that, if challenged, any gain was indeed £6,000 or less, otherwise the reporting obligation would have be triggered.
Any thoughts?
For 2023/4, the CGT allowance is a gain of £6000 or less, and my gain from a share sale this tax year this year is below this limit. The total realised by the sale is less than £24,000 ie 4 times the CGT allowance for this tax year. I will do as I have done in previous tax years, and assume there's nothing to report for CGT via SA for this tax year.
R.
I had a stab at trying to estimate the unrealised gain, but have given up.
It’s a listed mining co. that was acquired through probate in 1990 that has been allowed to build up through 30 years of DRIP, with a couple of rights issues thrown in, a handful of disposals, and an inter spouse transfer (which was subsequently reversed on first death).
Getting anywhere near a safe S104 value would be nigh on impossible IMO, but my gut feeling is that the average cost will be reasonably high despite the long holding period, as shares have been added at prices above the current SP over the years as miners are so cyclical.
Tempting to arrange a <£50k disposal and just wing it (under the radar), but in the absence of a definitive cost value, is there a remote risk that the disposal value could be taxed as if it was all gain?
It’s a listed mining co. that was acquired through probate in 1990 that has been allowed to build up through 30 years of DRIP, with a couple of rights issues thrown in, a handful of disposals, and an inter spouse transfer (which was subsequently reversed on first death).
Getting anywhere near a safe S104 value would be nigh on impossible IMO, but my gut feeling is that the average cost will be reasonably high despite the long holding period, as shares have been added at prices above the current SP over the years as miners are so cyclical.
Tempting to arrange a <£50k disposal and just wing it (under the radar), but in the absence of a definitive cost value, is there a remote risk that the disposal value could be taxed as if it was all gain?
I understand HMRC have ongoing projects into share sales:
https://www.tax.org.uk/share-sale-proceeds-hmrc-br...
So there is a chance they could look into the return. They would require detailed information on the cost of the shares, and without it, would demand CGT on the full sale proceeds.
https://www.tax.org.uk/share-sale-proceeds-hmrc-br...
So there is a chance they could look into the return. They would require detailed information on the cost of the shares, and without it, would demand CGT on the full sale proceeds.
And there's the rub.
Although that briefing could be referring to quite different circumstances, it's clear that HMRC's stick is large and the penalty could be based on 20% CGT on the realised proceeds (rather than on any agreed/definitive gain).
Realising less than £50,000 pa and keeping schtum may entail some risk - esp. if brokers/platforms are passing info directly to HMRC…
Not sure if it would be worth pitching an estimated S104 cost value, based on a fag-packet calculation, or, if that would simply lead to further correspondence?
The uncomfortable default is to leave the holding in place until second death, when the probate cost value will be reset...
Although that briefing could be referring to quite different circumstances, it's clear that HMRC's stick is large and the penalty could be based on 20% CGT on the realised proceeds (rather than on any agreed/definitive gain).
Realising less than £50,000 pa and keeping schtum may entail some risk - esp. if brokers/platforms are passing info directly to HMRC…
Not sure if it would be worth pitching an estimated S104 cost value, based on a fag-packet calculation, or, if that would simply lead to further correspondence?
The uncomfortable default is to leave the holding in place until second death, when the probate cost value will be reset...
Edited by Mogul on Wednesday 5th July 12:05
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