CGT on profits

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23rd Apr '17 by Bushranger

17 comments 7068 reads

A quick question on CGT for the year just finished. CGT allowance for shares was £11,000. If all my gains for THIS year total over 11,000 BUT when losses for THIS year are counted it falls below £11,000, do I have to declare anything to HMRC?

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Bushranger

Premium Member

17 comments

ratinahat001

23rd Apr '17

My understanding is that you have to do a tax return anyway, you will need to declare both gains and losses outside tax exempt wrappers. If your net gain is less than the threshold, then no CGT is payable.

I think that if you don't otherwise need to do a tax return, then you won't need to declare anything.

gus 1065

24th Apr '17

You might find the attached link to the HMRC website useful.

https://www.gov.uk/capital-gains-tax/work-out-need-to-pay

Bear in mind that if you disposed of assets with a value of more than 4x the annual CGT allowance (irrespective of the gain/loss) you will probably need to make a disclosure.

Gus.

Bushranger

24th Apr '17

Thanks GUS. I did go through the HMRC site, to no avail, which is why I ended up asking here. The point I was trying to clarify was if for example I made a total of £13000 CGT realised profit on some shares and a realised loss of £4000 on some shares in the tax year, do I need to inform HMRC as my total profit minus losses would be below the allowance threshold. The HMRC website is just not clear on that point. It talks about informing HMRC for tax purposes of a loss but would I be correct in assuming this is if there is a total/overall CGT loss for the year?

AnonymousUser858

24th Apr '17

You need to do a tax return and submit details of both your gains and your losses.

If the net outcome is a gain < the CGT allowance, then you'll pay no tax but you can't just not tell the HMRC about it

The only way to escape tax returns and the associated bureaucracy is to hold your investment funds inside ISAs and/or SIPPs (or other pension schemes).

Instead of relying on internet blogs like this one to provide a reliable and definitive answer you would be well advised to phone the Tax Help Line provided by HMRC and ask them directly.

andrewdb

24th Apr '17

What tournesol said.

If you follow advice here and it goes wrong, well, unlucky

If you follow advice given by the Tax Help Line and it goes wrong, they will have recorded the call (I suggest you do too or take contemporaneous notes) and you might get lucky - or at least not fined.

Rusty2

24th Apr '17

So every year you have do a tax return? Even if you only sell a few shares well below the CGT allowance?

omh

24th Apr '17

So every year you have do a tax return? Even if you only sell a few shares well below the CGT allowance?

No. As I understand it, if you are not otherwise required to do a return, having capital gains does not lead to a requirement to compelte one UNLESS:

You make (net) gains above the personal limit; OR

You make disposals (disposals, nothing to with gains or losses) of more than 4 times the personal limit; OR

you wish to record (net) losses.

But why rely on heresay when the HMRC site is pretty clear?

OMH

Rusty2

24th Apr '17

Thanks, I did look but did not see anything. But it does say you can declare them "straight away in the Report Capital Gains Tax online service (also known as the Real Time Transaction Tax return)
annually in a Self Assessment tax return"

So I will look at doing the online one. I only had them last tax year as I sold some high dividend to transferred into my ISA to avoid the dividend tax and, I only got caught out because Fyffes got taken over otherwise I would not have any CGT to declare. I did not know about the x4 the allowance but again only applies last year.

omh

24th Apr '17

Herbie

Hopefully the link will take you direct to the right page:

https://www.gov.uk/capital-gains-tax/work-out-need...

Even if your gains are below the tax-free allowance, tell HM Revenue and Customs (HMRC) if:

you disposed of chargeable assets with an overall worth of more than 4 times the Capital Gains Tax allowance - this works out as £45,200 for the 2017 to 2018 tax year but was less for previous years

you have losses that you want to claim

Report this in your tax return. If you’re not registered for Self Assessment, you can write to HMRC instead.

If you don’t have anything to report

If you’re not registered for Self Assessment you don’t need to do anything.
If you’re registered for Self Assessment you must still fill in the capital gains section of your tax return.

OMH

jonesj

24th Apr '17

I believe omh is correct and have been completing my tax returns on this basis for several years.

Whilst most of my investments are in an ISA & a SIPP, I still review matters in March with the aim of crystallizing gains to use the CGT allowance for my non sheltered accounts. I check both the gains & the total sales. So in the good years, I have a capital gain just below the allowance.

Rusty2

24th Apr '17

Thank yes, seems to contradict some of the other advise. Seems you can deduct losses and not have to declare anything if below allowance.
One part says do SA form and other says you can just do an online declaration just re CGT. Wish Govt, sites were clearer. "If you’re not registered for Self Assessment you don’t need to do anything.

If you’re registered for Self Assessment you must still fill in the capital gains."

I don't understand, why if you are registered you need to do a SA, I'm registered but I never do a SA because I don't have anything to declare. I suppose what they mean is if you have to do a SA you need to complete the CGT part on the SA even if you have declared it online or if your CG is below your allowance. WIsh the Govt. would make tax similar instead of making it more and more complicated.

What happens if you don't know how much you bought the shares for as it's a long time ago and the share certificated has been lost?

potter12

25th Apr '17

As others have confirmed, the HMRC site is the place to look, but from what you have said, you do not have to declare a capital gain as you are below the annual allowance.
However, if you plan to be a successful investor, why not register for self-assessment with HMRC and complete a tax return each year? Unless your affairs are complicated, in my experience of completing returns over 30 years, the process has become quite simple and is a good discipline. You may find like me that you are entitled to tax rebates which you wouldn’t have otherwise gained. This was true for my wife, even though she is a low tax payer, and has encouraged me to think about who owns what and ensuring our investments are tax-efficient.
It does mean that you have to keep a tax file, but especially as one nears retirement, the discipline ensures that one is informed on the current tax implications.
In my case, (and I accept this is not true for all) it has helped me save a fortune on advisors over the years, because I had a reasonable understanding of the tax implications of pension decisions. Investing in a SIPP for around 30 years since their inception has produced a nice pension fund – and one which I can pass on to my dependents free of IHT.

GrahamF

25th Apr '17

To herbie

"What happens if you don't know how much you bought the shares for as it's a long time ago and the share certificated has been lost?"

I think that if you hold the shares in certificated form you need to send the share certificate in to the broker when you sell them. You may even need to quote the certificate numbers to your broker. So, for this reason, if you've disposed of shares held in certificated form in the past year you will have had the certificates to hand.

If you know when you bought the shares (probably you have some piece of paper with the share certificate that gives this) you can look up the historical share prices on-line or ask your broker.

General comment to no one in particular:

I think that it is worth remembering in all this that (because the personal allowance for income tax has been raised by a considerable amount) to avoid many low earners whose total income is too low to pay any income tax having to claim back the basic rate income tax deducted at source etc., the rules were changed so that we receive our savings and investment income gross. And going along with this is the new Personal Savings Allowance and Dividend Income Allowance.

This is quite a good link page for advice
https://www.gov.uk/topic/personal-tax/savings-investment-tax

So, whether you filled out a SA in the past may be no guide to whether you need to now or in the future as we may have need to be paying some tax on the interest and dividends we have received.

So, the likelihood is that if you are successfully investing in shares outside ISAs and SIPPs sooner or later you may need to do an SA.

Whether or not you need to do the CGT part of the return is covered above. The only thing I would add is that, if you have had a particularly disastrous time for a short period and have overall losses for the year rather than gains, even though there is no CGT to pay that year, it is still worthwhile completing the CGT stuff so that you can declare the losses and carry unused losses forward to a future tax year to offset gains in that tax year.

https://www.gov.uk/capital-gains-tax/losses

If in doubt - take professional advice

Rusty2

25th Apr '17

Thanks but the share in question Fyffes was taken over so no share cert was required, I just got the money in a cheque. Fyffes is complex as it's in Euros and has demerged 2 parts of the company. End of the day it's not much money in tax, less than £100. I would have sold some shares at a loss but I did not have any.

Silver Moon

25th Apr '17

I'm taking note of this thread because for the first time I am going to need to do an SA for both my Capital Gains and Dividend Income. It's one of the plus points of recently-joined Stockopedia.

GrahamF

25th Apr '17

I understand now Herbie. Indeed, if you've got no records and you just get a cheque in the post that is difficult. I would contact the registrars for Fyffes and ask them if they can see from their details when you bought the shares (appeared on the register of shareholders). From the offer document...

Shareholder helpline
If you have any queries in relation to action to be taken, please contact Fyffes’ Registrars, Computershare Investor
Services (Ireland) Limited, on +353 1 431 9826 between 9.00 am and 5.00 pm Monday to Friday (other than bank
holidays in Ireland). For legal reasons, the Registrars will not be able to provide advice on the merits of the Acquisition
itself or give financial or tax advice.

Rusty2

25th Apr '17

Graham, thanks very much much, I will probably contact them. Such a nuisance that some old certificates got lost in a house move, with hindsight I should have moved them over to my broker before I moved.

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Bushranger

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