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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13979
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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a. Could you let me know the threshold for incurring capital

Customer Question

a. Could you let me know the threshold for incurring capital gains by selling off shares in one year.
b. Am I right that its the amount of profit from the original purchase?
c. Have you any tips for finding this out when the shares were bought a long time ago - should the share manager - in this case JP Morgan - have this information.
d. I have been out of work for the vast majority of this year. Can you tell me the current threshold for paying income tax, and also whether I am still liable for capital gains tax if below this threshold.

I'm trying to make a decision about whether to sell shares inside or outside the ISA wrapper to fund myself - all these questions are in that context.
I look forward to your response, Many thanks, XXXXX XXXXX
Submitted: 4 years ago.
Category: Tax
Expert:  Sam replied 4 years ago.

Hi Rosy

 

My name is Sam and I will answer your questions today.

 

 

a. Could you let me know the threshold for incurring capital gains by selling off shares in one year.

The threshold is £10,600 currently - and then up a max of the next £33035 is at 18% capital gain tax, then 28% thereafter (this is assuming you have no other income that uses any of the income tax basic rate band up)

If annual income was in excess of £42,475 then all the gain (after the first £10,600 exemption) would be at 28%
b. Am I right that its the amount of profit from the original purchase

Only if you purchased/acquired these shares after 31/03/1982. If you purchased/acquired before this date then you will need to revalue them due to rebasing to the value at 31/03/1982
c. Have you any tips for finding this out when the shares were bought a long time ago - should the share manager - in this case JP Morgan - have this information.

The share manager should have access to information that would allow him/her to value the shares at 31/03/1982. (due to rebasing) But if this is not possible then you can get this information from the organisation I have listed here which offers a variety of means to get this information

http://www.icaew.com/en/library/subject-gateways/financial-markets/knowledge-guide-to-share-prices/historic-share-prices-uk

There is charge involved, but at least its accurate information. (maybe ask your share manager to access this for you at its the least they can do ! And if they sell them for you, this is a small cost for the commission they will earn for your sale)
d. I have been out of work for the vast majority of this year. Can you tell me the current threshold for paying income tax, and also whether I am still liable for capital gains tax if below this threshold.

As advised above for the capital gain position, but so you can establish what basic rate band you have available to use against the gain.

For income tax the first £9440 is tax free (assuming you are under 65. Then the next £33035 is at 20% (known as basic rate)

If you were a higher rate taxpayer (income of more than £42,475 a year) then all the gain (after the first £10,600 exemption) would be liable to 28% capital gain tax.

But if you have not used all/any of the basic rate band, then the equivalent of this can be used to allow the gain up to £33,035 at 18% (after the £10,600 exemption) and any remaining gain will then be liable to 28% capital gains.

But I am afraid any element of the unused £9440 personal allowance used against income, cannot be used against a capital gain position, as it has its own exemption of £10,600

Do feel free to ask for clarification on any element of the answers provided.


Thanks


Sam

 

 

Customer: replied 4 years ago.

Thanks very much for your comprehensive answers Sam

Expert:  Sam replied 4 years ago.

HI Rosy

 

You are very welcome

 

Do come back to Just Answer if you have any further questions, and you can always ask for me Sam Tax - if you would prefer.


Thanks


Sam