Average share price calculation

[GN100]

I'm unsure where to post this question but here seemed a good place to start. For all my investing life I had assumed that my average share purchase price if I made several purchases at different prices was the sum of the purchase costs divided by the number of shares purchased. That's not difficult and agrees with my broker's figure. I had also assumed that the sale of part of the holding made no difference to my average purchase price - which also agrees with my broker's figure. However, I have suddenly rethought this. I now think that my average purchase price is the sum of the purchase costs less the sale proceeds divided by the new total of shares held, which does not agree with my broker's figure.

Can anyone confirm my most recent thoughts??? (I now realise that it was a sheer fluke that I studied A level maths - obviously I learned nothing!! )

This is to do with a CG calculation I have to make for some foreign taxation.

GN

[tjh290633]

I'm unsure where to post this question but here seemed a good place to start. For all my investing life I had assumed that my average share purchase price if I made several purchases at different prices was the sum of the purchase costs divided by the number of shares purchased. That's not difficult and agrees with my broker's figure. I had also assumed that the sale of part of the holding made no difference to my average purchase price - which also agrees with my broker's figure. However, I have suddenly rethought this. I now think that my average purchase price is the sum of the purchase costs less the sale proceeds divided by the new total of shares held, which does not agree with my broker's figure.

Can anyone confirm my most recent thoughts??? (I now realise that it was a sheer fluke that I studied A level maths - obviously I learned nothing!! )

This is to do with a CG calculation I have to make for some foreign taxation.

GN

As I understand it, the partial sale means that the average price per share for CGT is unaffected. If you deduct the sale proceeds from the original cost, you can easily end up with a negative cost, which is obviously incorrect.

Doing it that way, I currently have 3 shares with negative costs: AZN held since 1993, CPG held since 2001 in the split from Granada, and SGRO held since 2007. IMB had a massive negative cost from 2003 onwards, but has since moved positive. IMI was negative from 2011 to 2015. Several others had periods of negativity doing it your way, which I also use. The other method is the correct one for CGT purposes in the UK.

TJH

[scrumpyjack]

Sales or partial sales have no effect on your acquisition cost of the remaining shares for CGT purposes.

[GN100]

Thanks TJH and scrumpyjack. As always Terry's logic answers my question succinctly.

GN