The Lemon Fool

I have just had an unexpected capital gain (from the sale of nil paid rights in a foreign private company if that makes a difference) that with other sales I have made this year takes me over the £12300 allowance. So I have just sold NWG which was sitting at a massive loss and brings the gains less losses below the allowance. In total proceeds were £26700 so under 4x the allowance. Gains were £16800 from 3 sales and losses were £5200 from 5 sales, but mostly from NWG (numbers rounded).

So clearly ( I hope) no tax to pay. My question is do I need to tell HMRC as I don't normally do a tax return. I'm not worried about carrying forward any loses (which from the figures given would be £700 of loses to carry forward). If I do need to tell HMRC could I just send them a letter setting out the gains and losses?

The HMRC Capital Gains Tax summary notes are here:
https://assets.publishing.service.gov.u ... s-2022.pdf

‘Fill in the ‘Capital Gains Tax summary’ pages if:
• you sold or disposed of chargeable assets which were worth more than £49,200
• your chargeable gains before taking off any losses were more than £12,300 (‘annual exempt amount’)
• you have gains in an earlier year taxable in this period
• you want to claim an allowable capital loss or make a capital gains claim or election for the year
• Etc.’

The net gain is less than £12,300 (‘annual exempt amount’); there will be no loss to carry forward.

You don't need to submit the CGT pages if your total gains (ie gains less losses) are below the annual allowance and disposal proceeds less than 4 x the allowance.
https://www.gov.uk/capital-gains-tax/wo ... Assessment

So you don't need to complete them

ps ensure you have correctly calculated the gain on the nil paid rights sale as this will involve apportioning your cost between the remaining shares and the rights sold, which can get complicated.

scrumpyjack wrote: ensure you have correctly calculated the gain on the nil paid rights sale as this will involve apportioning your cost between the remaining shares and the rights sold, which can get complicated.

Interesting, In the past I have treated right issues as having a zero cost basis, so that the gain is the amount of the proceeds. Unless I take up the rights of course.

Lootman wrote:

scrumpyjack wrote: ensure you have correctly calculated the gain on the nil paid rights sale as this will involve apportioning your cost between the remaining shares and the rights sold, which can get complicated.

Interesting, In the past I have treated right issues as having a zero cost basis, so that the gain is the amount of the proceeds. Unless I take up the rights of course.

That is not correct.

The cost of the nil paid rights is calculated based on the closing value of the rights on the first day quoted plus the closing value of the fully paid shares on the same date. The total cost is apportioned between the rights and the fully paid shares pro rata. Your approach overstates the gain.

scrumpyjack wrote:

Lootman wrote: Interesting, In the past I have treated right issues as having a zero cost basis, so that the gain is the amount of the proceeds. Unless I take up the rights of course.

That is not correct.

The cost of the nil paid rights is calculated based on the closing value of the rights on the first day quoted plus the closing value of the fully paid shares on the same date. The total cost is apportioned between the rights and the fully paid shares pro rata. Your approach overstates the gain.

Fair enough. As long as I overpaid my tax then I guess I was never going to get into trouble for my error. They were small amounts anyway.

Lootman wrote:

scrumpyjack wrote: That is not correct.

The cost of the nil paid rights is calculated based on the closing value of the rights on the first day quoted plus the closing value of the fully paid shares on the same date. The total cost is apportioned between the rights and the fully paid shares pro rata. Your approach overstates the gain.

Fair enough. As long as I overpaid my tax then I guess I was never going to get into trouble for my error. They were small amounts anyway.

I'm going the overstated route and paying too much tax* as I'm uncertain of the apportionment and would rather pay too much tax than too little and risk underpaying.

* except I'm paying no tax this time as I've managed to make losses to counteract the gain.

daveh wrote:

Lootman wrote: Fair enough. As long as I overpaid my tax then I guess I was never going to get into trouble for my error. They were small amounts anyway.

I'm going the overstated route and paying too much tax* as I'm uncertain of the apportionment and would rather pay too much tax than too little and risk underpaying.

* except I'm paying no tax this time as I've managed to make losses to counteract the gain.

Of course that means you will be overstating the cost of your remaining holding, because some of that cost belongs to the rights! So a future disposal would then understate the profit then!