Reporting Limits

[Citizen7]

My understanding is that the reporting limits for disposals in a tax year are £12,300 for gains and £49,200 for the total value of disposals. Thus if I am below both of the above in regard to both gains and the total value of all assets sold in the tax year then I do not need to report anything in my annual Self Assessment (SA) return. So, perhaps, I would like to ask first if the above is correct.

On the assumption that the above is correct, my question then is how does that work in practice. Thus, when I come to complete my tax return and am asked if I had any taxable disposals in the tax year, do I simply say no? That feels awkward, in the sense that the strictly correct answer must be yes…but with the qualifier that my disposals are below the reporting limits….except that the SA return form doesn’t allow a person to do that….or at least that would be my understanding.

I can’t help thinking I must be missing something, but, either way, I would certainly appreciate knowing what the correct treatment is if anyone knows.

C7

[gryffron]

Correct.

Correct you just say no. Because you have no taxable disposals.
You have some disposals which might under some circumstances become notifiable/taxable, but because you are below the limits they aren't.
Disposals within ISAs ignored for the same reason.

Look at it from HMRC perspective. They're just not interested in transactions which do not give rise to taxes (or possibility of same).

Gryff

[Lootman]

Correct you just say no. Because you have no taxable disposals.

You have some disposals which might under some circumstances become notifiable/taxable, but because you are below the limits they aren't.
Disposals within ISAs ignored for the same reason.

Look at it from HMRC perspective. They're just not interested in transactions which do not give rise to taxes (or possibility of same).

Interesting, I had not thought about it that way.

I have not had this situation myself because I always have gains above the annual CGT-free limit and so have to report each sale anyway. But if I were below the limits I would still report the gains even though no tax is due. I have to do a self-assessment tax return anyway and I would always favour being complete.

And I have the idea that HMRC do want to see those declarations even though no tax would be due. Because taken together with my other declarations, those proceeds and gains provide a complete picture of my cashflows in for the year. And without those proceeds and gains, it might appear to the taxman that my income is much lower, which in turn might raise questions about my lifestyle relative to what was declared.

Where it would make a difference however is if I otherwise would not have to do a self-assessment return at all. Then as long as I was below the limits, I would decline to submit a return altogether. But as long as I am doing a SA return anyway then I would include details of all sales.

[ursaminortaur]

Correct you just say no. Because you have no taxable disposals.

You have some disposals which might under some circumstances become notifiable/taxable, but because you are below the limits they aren't.
Disposals within ISAs ignored for the same reason.

Look at it from HMRC perspective. They're just not interested in transactions which do not give rise to taxes (or possibility of same).

Interesting, I had not thought about it that way.

I have not had this situation myself because I always have gains above the annual CGT-free limit and so have to report each sale anyway. But if I were below the limits I would still report the gains even though no tax is due. I have to do a self-assessment tax return anyway and I would always favour being complete.

And I have the idea that HMRC do want to see those declarations even though no tax would be due. Because taken together with my other declarations, those proceeds and gains provide a complete picture of my cashflows in for the year. And without those proceeds and gains, it might appear to the taxman that my income is much lower, which in turn might raise questions about my lifestyle relative to what was declared.

Do you add in a note about all your ISA holdings ? Otherwise "it might appear to the taxman that my income is much lower, which in turn might raise questions about my lifestyle relative to what was declared".

[swill453]

And I have the idea that HMRC do want to see those declarations even though no tax would be due. Because taken together with my other declarations, those proceeds and gains provide a complete picture of my cashflows in for the year. And without those proceeds and gains, it might appear to the taxman that my income is much lower, which in turn might raise questions about my lifestyle relative to what was declared.

Do you add in a note about all your ISA holdings ? Otherwise "it might appear to the taxman that my income is much lower, which in turn might raise questions about my lifestyle relative to what was declared".

I must live a dull life, I'm pretty sure the taxman knows nothing about my lifestyle...

Scott.

[mc2fool]

when I come to complete my tax return and am asked if I had any taxable disposals in the tax year, do I simply say no? That feels awkward, in the sense that the strictly correct answer must be yes…

The online self assessment doesn't ask you that. What it asks you is:

"If you disposed of any chargeable assets, or had any chargeable gains, or you wish to claim an allowable loss, or make any other claim or election, do you need to complete the Capital Gains section? Please check help before selecting." and then there's the Yes & No buttons.

So what it asks you is if you need to fill in the capital gains section, so there's no apparent yes/no conflict as you express. If you select No it simply doesn't present you with the Capital Gains section.

The "Help about: Tailor your return 07 - Capital gains" click-to-expand section immediately below goes on to say:

"If you need to complete the Capital Gains section, select 'Yes', otherwise, select 'No'.

You must report your capital gains and attach your computations if in the tax year either:

you disposed of chargeable assets which were worth more than £49,200
your chargeable gains, before the deduction of any losses, are more than £12,300
you have gains in an earlier year taxable in this period
you want to claim an allowable capital loss or make any other capital gains claim or election for the year

In working out if the assets you disposed of were worth more than £49,200 use the market value of any assets you gave away or sold for less than full value and ignore disposals of:

exempt assets such as private cars, shares held within Individual Savings Accounts
assets to your spouse or civil partner, if you were living together at some time during the tax year
your own home where:
it's been your only home during your ownership and was not used for any other purposes, for example, in your business
the house has been used as your home throughout your ownership, but you can ignore the last 18 months of ownership
the garden and grounds disposed of at the same time do not exceed half a hectare

In working out your total chargeable gains include any gains attributed to you, for example, because you're a settlor or beneficiary of a trust, or in certain cases where you're a member of a non-resident company."

[Lootman]

Do you add in a note about all your ISA holdings ? Otherwise "it might appear to the taxman that my income is much lower, which in turn might raise questions about my lifestyle relative to what was declared".

I must live a dull life, I'm pretty sure the taxman knows nothing about my lifestyle...

I had heard that in some situations the taxman will look at your lifestyle and, if your declared income appears to be inadequate to support such a lifestyle, then they may start digging around more, or even initiate an investigation.

I imagine it would not be hard to build a picture of your lifestyle based on information like your location, vehicle(s), holidays, known outgoings and consumption, mortgage, bank and credit card statements etc.

Ursa's point about not needing to declare ISA profits is well taken, but then people generally don't make annual withdrawals from an ISA. Whereas share sales do lead to an immediate increase in cashflows in.

In any event I would feel better about making such declarations, and it provides a useful historical record of disposals as well.

[Citizen7]

My thanks to all who replied to my initial post above, your help is very much appreciated.

Perhaps particular thanks to mc2fool for the additional detail in your post and for taking the time to quote exactly what the Self Assessment form says.

Much obliged to all.

C7

[monabri]

Hypothetical Question.

If I sold shares in "n" companies and my total capital gain was £14,300 ( but still within the 49.2k), what would go down on the tax form?

(1) All transactions in detail to show how the gain of £14,300 was derived based on individual gains/losses of said "n" shares

(2) a line entry declaring £2,300 as the excess above the allowance ( with no details of the buys/sell values).

(3) something else

[genou]

Hypothetical Question.

If I sold shares in "n" companies and my total capital gain was £14,300 ( but still within the 49.2k), what would go down on the tax form?

(1) All transactions in detail to show how the gain of £14,300 was derived based on individual gains/losses of said "n" shares

That's the answer.

[Lootman]

Hypothetical Question.

If I sold shares in "n" companies and my total capital gain was £14,300 ( but still within the 49.2k), what would go down on the tax form?

(1) All transactions in detail to show how the gain of £14,300 was derived based on individual gains/losses of said "n" shares

That's the answer.

Correct although note that it is not actually necessary to report the number of shares sold. For partial disposals you will need to use "n" to compute the share of the cost basis to be applied. But there is no need to report it. Nor the date of acquisition despite the form asking for that!