Capital Gains for part realised gain

[Tegriffic]

Any capital gains experts can advise me here please – I might be having a wood for the trees moment.

As an example (and assuming I’ve blown my capital gains allowance already) if:

I buy £1,000 of Company A shares at £1 each then I buy a further £1,000 of Company A shares at £2 each – so I now have 1,500 shares and an outlay of £2,000. Share price goes to £4 and just before new tax year I sell 750 at £4 so £3000 but I still have a holding of 750 shares as I go into the new tax year upon which any gains or losses have not yet been realised.

For the purpose of working out what my gain is within that £3,000 sale (for this tax year), what value do I assume for the outlay in that tax year ?

Do I assume the whole £2,000 this tax year and treat sales in future as all tax chargeable or do I assume 50% outlay (ie. £1,000) because I’ve only realised gains on 50% of that asset ?

Anyone know how the tax man would expect me to calculate that please ?

Thanks.

[Eric Mc]

Are they close to the actual numbers?

[Mr Pointy]

This Helpsheet may be useful. I think you calculate an average cost of the Section 104 holding:

https://www.gov.uk/government/publications/shares-...

Your average cost is 2000/1500 or £1.33 each so your cost is 750 x £1.33 = £1000 (£999.99) & your gain is £3000 - £1000 = £2000

There are a couple of wrinkles though.

[Tegriffic]

Thanks for the replies. Not actual numbers just a simplified example.

[Eric Mc]

Tegriffic said:

Thanks for the replies. Not actual numbers just a simplified example.

The reason I was asking is because all the numbers quoted were well below the Capital Gains Tax exemption limits. Do the total gains exceed £12,300 in any year?

[Mr Whippy]

Mr Pointy said:

This Helpsheet may be useful. I think you calculate an average cost of the Section 104 holding:

https://www.gov.uk/government/publications/shares-...

Your average cost is 2000/1500 or £1.33 each so your cost is 750 x £1.33 = £1000 (£999.99) & your gain is £3000 - £1000 = £2000

There are a couple of wrinkles though.

This is how I understand it's to be done in the example case.

Pretty simple stuff really.

[Mr Pointy]

Eric Mc said:

Tegriffic said:

Thanks for the replies. Not actual numbers just a simplified example.

The reason I was asking is because all the numbers quoted were well below the Capital Gains Tax exemption limits. Do the total gains exceed £12,300 in any year?

In the original post the OP does say to assume he has already used his CGT allowance for the year.

[millen]

One somewhat off-topic pedantic query: I tend to avoid trading right at the year end. However, most UK brokers apply 2-day settlement. If I sold a share on 4 April, which was settled on 6 April, I assume the disposal would still be deemed by hmrc to fall into the first tax-year not the second - can anyone confirm or otherwise please? TIA!

[ziontrain]

millen said:

One somewhat off-topic pedantic query: I tend to avoid trading right at the year end. However, most UK brokers apply 2-day settlement. If I sold a share on 4 April, which was settled on 6 April, I assume the disposal would still be deemed by hmrc to fall into the first tax-year not the second - can anyone confirm or otherwise please? TIA!

Yes, it's the order date rather than the settlement date which is relevant

[millen]

ziontrain said:

millen said:

One somewhat off-topic pedantic query: I tend to avoid trading right at the year end. However, most UK brokers apply 2-day settlement. If I sold a share on 4 April, which was settled on 6 April, I assume the disposal would still be deemed by hmrc to fall into the first tax-year not the second - can anyone confirm or otherwise please? TIA!

Yes, it's the order date rather than the settlement date which is relevant

Thanks ziontrain - that makes sense. I also use a European broker age who simply records transaction/order date without any separate settlement date.