The Lemon Fool

I’m just not 100% sure of the position in regard to this matter so all help would be appreciated. Specifically, I am writing about the calculation of a gain or loss when disposing of a stock.

Let’s say I have X no of shares in ABC company in a taxable account (GIA1). I also hold ABC company stock in a second taxable account (GIA2). However, I also hold more shares again in ABC, but this time in an ISA.

If I sell some or all of my ABC shares in GIA1, I will need to calculate the gain or loss arising. I know that, in order to calculate the base cost for my holding in ABC, I must also include the shares in my GIA2 account. However - and this is where my uncertainty lies - do I also need to take account of the shares in my ISA? In other words, must the base cost calculation be based on the cost of ABC shares across all three accounts?

The phrase that sticks in my mind - wherever I heard it - in this regard is ‘the taxman is bound to all that happens in an ISA’ and the key words therein are ‘happens inside’. Is it possible that the above is not something that happens inside the ISA and so a taxpayer cannot ignore the base cost of the ABC shares held inside the ISA when calculating their base cost for the CGT calculation necessitated following the disposal in GIA1.

I hope the above is clear and would welcome all comments and thoughts.

C7

No, anything inside an ISA is of no concern to HMRC. There is no income or capital gains tax inside the isa. You do not need to declare anything inside an ISA to HMRC.

Anything outside the USA as you say must be counted.

Citizen7 wrote:If I sell some or all of my ABC shares in GIA1, I will need to calculate the gain or loss arising. I know that, in order to calculate the base cost for my holding in ABC, I must also include the shares in my GIA2 account. However - and this is where my uncertainty lies - do I also need to take account of the shares in my ISA? In other words, must the base cost calculation be based on the cost of ABC shares across all three accounts?

Transactions in the ISA are irrelevant. It is accounts 1 and 2 that matter. See this recent discussion of "bed and ISA" transactions:

viewtopic.php?f=49&t=33285

As an aside i think it is ridiculous that, if the sale is from account 1, that the holdings in account 2 have to be taken into account. Almost nobody thinks that way, instead regarding those two positions as being fully independent lots. It also means in that case that any broker records of cost basis will be plain wrong and cannot be relied upon.

Moreover I doubt that HMRC has any knowledge of you having the same position at two different brokers. So for as many investors who report gains wrongly in this regard, I suspect that very few get caught up on it.

Nonetheless, you are supposed to compute the average cost across the two different brokers, but disregard the ISA (or any SIPP).

My thanks to both Midsmartin and Lootman for your replies - very much appreciated.

I have since noticed an error in my original post. It should have read ‘the taxman is blind (and not ‘bound’ as originally written) to all that happens inside an ISA’.

That said, my thanks once again for the very helpful replies, especially as they will allow me to proceed with some transactions I have been considering for a while now.

C7

Did the OP build up their holding with several purchases, and then transfer part of the holding in GIA1 to GIA2 in specie and back again, so all the shares are entangled? Otherwise when you dispose of a certain %age of a holding you calculate the average purchase price per unit of that holding, and compare it with the sale unit price. Second holdings of the same thing bought elsewhere are irrelevant, irrespective of their tax status. Even a one-way transfer causes no problems, as you just need to calculate inheritance.

JohnB wrote: Second holdings of the same thing bought elsewhere are irrelevant, irrespective of their tax status.

This has been wrong since April 2008. See https://www.legislation.gov.uk/ukpga/19 ... ection/104