Hi i wonder if someone can help if one has made a chargeable gain on an investment that needs to be declared to hmrc is it a standard self assessment form that needs filling in or is there a specific tax document for cgt only ?
Thanks
Thanks Gromley and Northender doh my bad maths yes other figure should have been £7,700 to net off against the 20k gain I seem to remember reading something about the 4 x annual exempt amount rule also
A little off topic but the cgt rate paid and yearly allowance could change significantly for 2021/22. The autumn budget was delayed due to covid and will now take place in March so we'll find out soon enough. Interested if anyone has a view as to what route the government may take for 2021/22 and beyond?
Yes I believe Gromley is correct, you need to declare any gain over the allowance, even if you have losses that take your gains down below the allowance.
I got caught on the 4x the allowance and have to do tax forms every year now even though I never have any tax to pay.
Yea - again I'm going from slightly dodgy memory (so don't rely on this too much), but I think if your total gross proceeds are more than 4 x the annual exempt amount then you have to declare them even if the gain is insufficient to attract any CGT.
Also going back to my previous experience, I think the rules used to be that if you were offsetting a capital loss from a prior year, you had to show your workings regardless of the result.
In fairness I think the online guidance from HRMC sitting alongside digital submission has improved a lot over the years, so probably the best answer would be to use their online submission and see,
On leaving a job some years ago I never received a P60 form. The company in question claimed to have sent it to me, refused to send me a copy as “it’s not allowed” and refused to provide a statement of earnings instead. So, I guessed that I could just use figures from my last pay slip instead. I phoned HMRC to ask them if that was Ok. They asked me what figures I had, so I read them out. They then said, “that’s correct, those are the figures we have too”. So, HMRC may already know about your gains and losses.
Basically, HMRC already gather much of this information from employers, banks, brokers etc. In some ways, the tax return is just a way for them to verify what they already know about you and see if there’s anything they don’t.
So, I would declare the capital gains and losses if you meet the criteria (already mentioned) to do so even if there’s no tax to pay. That way, everything marries up, and you have a record of these transactions and declarations that you can fall back on later date if you need to, and HMRC can see that you’re a fine citizen declaring things correctly.
Hi Herbie so is it a case that even if you have £1 gain over the £12,300 annual allowance and assuming you have losses to net off that £1 gain and you haven't turned over more than four times £12,300 in stock over the tax year you still need to declare to HMRC ?
Well that is my understanding. But I do self assessment. I need to report the gains and the losses even though the overall gains are below the allowance.
If the sale of all your shares, is over 4 x 12,300 which is £49,200, you also need to declare it.
I did not realise this when I sold a load of shares to avoid the dividend tax.
I take it you don't do a self assessment tax return?
Hi Herbie used to ten year plus back but nothing in recent years and when I had to complete never touched cgt issues but appreciate the input from all on the site reading between the lines the key seems to be if you don't want to get into self assessment don't fall foul of the 4 x turnover rule and keep your gain after netting off any losses below £12,300.
In the ideal world get the whole lot into ISA's and you don't have the headache.
"Thanks all am I right in thinking that if say for example you have made a gain of 20k - allowance of £12,300 and then lets say you have losses of £6,700 which you crystalise at the same time you sell for the gain you don't have to declare anything ?"
For me, I always show my workings and record it on the correct boxes on the S.A. and check it multiple times.
The HMRC won't like estimates. They will want to see calculations. You are liable and fineable for any errors or negligence.
The S.A. has a workings sheet to show all your calculations.
I never trust their working sheet alone (rounded to the pound) and re-produce my own to the penny.
The boxes are very unfriendly and hard to understand, but you need to fill every HMRC box out correctly.
If you don't fill out some HMRC box correctly, some junior "Hector" will open an "Official Investigation" against you and that creates a whole host of severe problems, including that they will then ask for paper copies of everything and can then back-date and widen an Official Investigation.
You don't want to have an HMRC Investigation opened against you!
Yes that is what I have now done, got everything into ISAs, no doubt the rules will change again.
I still get blinking tax forms every year.
It has been a while for me, but I thought there was an option to "apply" to them to take you off the automatic requirement to complete a Tax return.
As I recall from a few years ago I didn't apply but they informed me I no longer needed to complete one.
Maybe you still have something that needs you to complete one.
Not exhaustive (possibly not even 100% correct), but that could include :
To be honest though if you pass all of those tests, pay marginal tax at 40% and make Gift-Aided charitable donations; it may well still pay you (not at lot) to complete a return. I think though when I stopped completing them they "assessed" (/guessed) what my gift-aid entitlement would be, based on past numbers.
Hi Gromley,
Never heard of the "option to "apply" to them to take you off the automatic requirement to complete a Tax return." I will look into that.
I was close to CGT allowance 2 years ago but not now as most have been sold and nearly everything is within an ISA.
The format seems to change year by year. I filled in my tax form last week. Last year I had to input every share that I had sold with the loss or gain attached, which was OK but a chore. This year they want that information uploaded as a pdf. So I just collated it all into a single figure which I sent to them, telling them I can break it down share by share but don't know how to create a pdf.
When I came to the UK a senior tax adviser told me that HMRC were understaffed and overworked, and as long as you were reasonable and did not try to conceal anything from them, you could apply some common sense. That's the approach I take. I refuse to make ridiculous amounts of work for myself. I tell them the truth and pay the right amount of tax, but if they want to change the reporting format all the time they are welcome to investigate me.
Or in one line, I used the standard self-assessment form and gave them a single net figure for my profits and losses without referring to any transactions.
Thanks for the input all just weighing up if I were to sell some stocks how to stay within the rules and avoid getting tied into self assessment.
I was aware of the 4 x turnover rule but wasn't aware that if you go above your allowance even if the excess gain is netted off by losses you still have to then report it.
The real value of the Stock platform is that there are some real sharp operators on the forum board, when compared to Advfn ramps with the complete lack of even basic research other than "these will be a fiver next week bid coming" its like comparing a DB7 with a Lada Samara.
Again massive thanks for the feedback all.
Don't forget, even if you're a long way from CGT reporting thresholds currently, it's still important to keep good records of purchase costs and partial disposals - for the day when you do breach the thresholds and are left scratching round to re-create costs of investments purchased some years ago.
Another tip - if you're into 'funds' avoid 'accumulation units' like the 'flu! It can be a nightmare to compute your underlying base cost when you come to sell.
And another - I've found it makes life easier to minimise 'partial disposals' of stocks, or at least compress all your disposals into a shortish timeframe to end up with a 'clean break' that's not interrupted by partial repurchases, all of which complicates the base acquisition costs. I'm sure there's software available to do all the complex calcs but I try to keep things simple.
If you do have accumulation units and trying to calculate the gain, does anyone have any advice on how to get historical distribution records other than going back to the fund manager company which so far has proved unsuccessful . If not possible to get records for some years, would it be acceptable to estimate other years, for example using the same % rate?
I've never had to do a capital gains tax payment, so take this with a pinch of salt, but can you just use the figures from the income version of the fund - I'd have thought payouts should be the same for both ? - I'd work it out individually for each year to allow for compounding.
I have previously resorted to using the fund annual reports, one year at a time to find that info.
Hi marshr2 - I think it always depends on a degree of materiality in these things
My accountant will always tell me that a reasonable estimate used in a return is better than ignoring / forgetting / "hiding" a number from a return (and that HMRC probably have a view of anyway)
So materiality in the size of the number and of the accuracy of the estimate in the calculation of the amount that would be due. Is it worth their while to contest and chase?
