The Lemon Fool

Dear all,

I was wondering if anyone had thoughts on the following (simplified) situation:

100 shares of XYZ held in an account in my name bought for GBP 1.00 each
200 shares of XYZ held in a joint account with my wife bought for GBP 2.00 each

Sell 50 shares from the joint account for GBP 3.00 each

My questions is what is the chargeable gain for each of us.

For my wife it seems simple, she has sold 25 shares for GBP 75 that had a cost basis of GBP 50 so therefore gain of GBP 25.

For me I am wondering if the correct treatment is to only look at the jointly held shares, and therefore also have a gain of GBP 25.

Or alternatively is it correct to say that I previously held a combined 150 shares at a cost basis of GBP 200 (i.e. 1.3333 each) and sold 25 of them for GBP 75 so have gain of GBP 41.6666

I.e if shares are held both individually and jointly does an individual have to account for their aggregated holding at all times for the purposes of a CGT calculation?

Kind Regards,

Arniedude

Your 'cost', when you sell some shares, is the proportion of the total cost of your holding, irrespective of which platform's holding you sell. This is one reason why individual brokers are unable to provide reliable accurate CGT information to clients because they cannot know what shares you hold with other brokers.
Not quite sure about the joint a/c issue. I presume you take 50% of the shares held jointly (and half the cost) for the purposes of your calculations
I think you have 200 shares (100 on your own and 100 being half of the joint holding) and a total cost of £300 (100 at 100p and 100 at 200p)

What scrumpyjack said.

Thanks both, I suspected that was the right treatment as well - appreciate your attention!

Arniedude

scrumpyjack wrote:Your 'cost', when you sell some shares, is the proportion of the total cost of your holding, irrespective of which platform's holding you sell. This is one reason why individual brokers are unable to provide reliable accurate CGT information to clients because they cannot know what shares you hold with other brokers.

That is only a problem in the UK because there is no choice about which allocation method you use. It is average cost or nothing.

US brokers provide full capital gain and loss data in their equivalent of the consolidated tax certificate - the 1099. And woe betide you if you report gains that vary from what is on the 1099 because they get sent to the IRS as well.

So there is no reason in principle why brokers cannot provide accurate info on gains. The US manages that even though you can choose between average cost, FIFO, LIFO, HIFO, LowFo and specific lot selection.

We are talking about UK CGT here, not any other country, and UK brokers can only report on dealings with their firm. Firms like HL don't even bother anymore!

scrumpyjack wrote:We are talking about UK CGT here, not any other country, and UK brokers can only report on dealings with their firm. Firms like HL don't even bother anymore!

I have found the cost basis provided by ii to be very reliable, with the exception of two corporate actions that they mishandled, but that was obvious at the time. I would not be happy if they stopped providing that info.

I only gave the US as an example because brokers there are legally responsible for providing accurate gain/loss data, so it is possible for brokers to get it right in principle.

Arniedude wrote: Or alternatively is it correct to say that I previously held a combined 150 shares at a cost basis of GBP 200 (i.e. 1.3333 each) and sold 25 of them for GBP 75 so have gain of GBP 41.6666

I.e if shares are held both individually and jointly does an individual have to account for their aggregated holding at all times for the purposes of a CGT calculation?

Correct.

Of course you can really complicate matters by gifting some or all of "your" shares to your wife, say by moving them into the joint account (so half become hers at the lower price), in which case she will be deemed to have acquired them at your original cost, increasing her profit and reducing yours.

This may be beneficial from a CGT angle, but my head hurts even thinking about doing the calculation.

Paul