CGT Question

[NoBrakesNeeded]

Evening All,
Last tax year I disposed of some foreign shares which have left me with a small capital gain and I'm trying to work out my tax exposure for SA.

Let's say I sold €30k of shares with a gain of €5k Euro in June 24. When they were sold there was a €100 admin fee and when transferred to my UK bank account I was charged €500 in exchange fees. My understanding is that I can deduct the €100 admin fee from the gain but I can't deduct the €500 in exchange fees - i had no choice as this was all done by the broker and it seems weird that I pay tax on money I never received.

I'm currently wading through the CGT manual on HMRC but thought someone on here might be able to confirm either way...

[Countdown]

I would have thought you could. I'm not exactly sure what "exchange fees" are but it seems like an incidental cost of sale.

https://www.thefriendlyaccountants.co.uk/allowable...

[alscar]

I believe you cannot deduct foreign exchange fees from the CGT calculation even though “ logically “ you would think you should be able to.

[Eric Mc]

I would assume that the OP is talking about fees charged in relation to the fact that the gain was originally in a foreign currency and these are the currency conversion charges.

[alscar]

That was my assumption hence my reply - is your view the same ?

[Eric Mc]

I've just listened to a webinar on CGT and not all costs incurred in calculating CGT are allowable. I'll have a check.

Here's what HMRC's own manual says -

CG15250 - Expenditure: incidental costs of acquisition and disposal

TCGA92/S38 defines the incidental costs of acquisition and disposal. The definition is exhaustive. No other expenditure is allowable unless specifically provided for by TCGA92 (see, for example, TCGA92/s143(6) (see CG56084).

If a disposal by a company (Company A) is deemed to have been made by another company (Company B) following an election under TCGA92/S171A (CG45355), incidental costs of disposal incurred by Company A which would have been allowable if the gain had been chargeable on Company A can be allowed in the computation of the gain chargeable on Company B.

Allowable incidental costs are limited to

fees, commission or remuneration paid for the professional services of any surveyor, valuer, auctioneer, accountant, agent or legal adviser
costs of transfer or conveyance (including Stamp Duty or stamp duty land tax)
costs of advertising to find a buyer or seller
costs reasonably incurred in making any valuation or apportionment required for the purposes of the Capital Gains Tax computation.
The expenditure must have been incurred wholly and exclusively for the purposes of the acquisition or disposal.

You should allow a deduction for fees paid to a professional adviser only to the extent that they are directly referable to the cost of acquiring or disposing of each particular investment. To the extent that the fees relate to advice about the general state of markets or the prospects of particular forms of investment or the management of a portfolio, they are not allowable.

You should not allow a deduction for subscriptions for periodicals or for publications by analysts, stockbrokers or other professional advisers, whether for public or private circulation. Other similar types of expenditure are not allowable.

Accountant's fees are allowable only to the extent that they relate to the ascertainment of market value of the assets or to any apportionment for the purposes of the computation. Otherwise, fees for the computation of liability are not allowable. It follows that, in the case of quoted securities, allowable accountancy fees will usually be very small. In respect of any extra accountancy fees incurred in agreeing a valuation, see CG15260.

[NoBrakesNeeded]

Thanks All.

There are two debits on the transaction statement;

Commission fee - which I believe I can deduct from the gain as it is an incidental cost
Foreign Exchange Cost - which I don't believe I can but it seems a grey area in the HMRC manual - could it be a cost of transfer?

Anyway, it's only a relatively small gain and this would save about £200 but still it's £200 to HMRC!

[Eric Mc]

Claim it and see what happens

[Mr Pointy]

Eric Mc said:

Claim it and see what happens

This is what I'd do: if it gets picked up then you just apologise for the mistake. You aren't going to jail for it.

[MaxFromage]

Converting to GBP would not be a cost deductible for CGT purposes.

Assets held in a foreign currency should be converted into GDP on purchase and sale using spot rates and those figures used to calculate the gain.

[The Leaper]

MaxFromage said:

Converting to GBP would not be a cost deductible for CGT purposes.

Assets held in a foreign currency should be converted into GDP on purchase and sale using spot rates and those figures used to calculate the gain.

I agree. I do this as regards the reporting, for UK income tax purposes, of dividends from my ESPP which is USA based. As regards CGT, I did the same on acquisition of the shares, and will do the same on their sale. Simple really.

R.

[The Leaper]

MaxFromage said:

Converting to GBP would not be a cost deductible for CGT purposes.

Assets held in a foreign currency should be converted into GDP on purchase and sale using spot rates and those figures used to calculate the gain.

I agree. I do this as regards the reporting, for UK income tax purposes, of dividends from my ESPP which is USA based. As regards CGT, I did the same on acquisition of the shares, and will do the same on their sale. Simple really.

R.

[NoBrakesNeeded]

Thanks All for the feedback.

Looks like I can't claim the conversion costs and it seems my original spreadsheet is slightly wrong as I was calculating the gain based on the euro price the shares were awarded and the sale price - all in euros, rather than the GBP conversion based on the close price on the day and the GBP price on the day of sale.

Will go back and redo!

Thanks and Happy New Year...