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Sam, Accountant
Category: Tax
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I bought Alliance Trust shares in September 1997 for £100,000.

Resolved Question:

I bought Alliance Trust shares in September 1997 for £100,000. They're now worth £200,500. How do I calculate the CGT?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.




Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.



Assuming the sale will take place in this tax year, and you sell them all - then the first £11,00 of the gain made ( £100,500) will be tax free, leaving the balance of £89,500 liable to capital gains tax.



Capital gains tax, is either 18% or 28% or a mix of both. If your annual income for the year is in excess of £41,865 - then the capital gain rate will be 28% - If your annual income is less than £41,865, then any unused basic rate band can allow the equivalent of gain to be charged at 18% and any further gain remaining at 28%.



If you advise your annual income I can advise the gain that will arise for you. Thanks Sam

Customer: replied 3 years ago.

Does "annual income" number exclude the capital gain?


The whole investment and proposed sale are 50/50 with my wife. My income is way over £41,865 anyway, but hers is about £40,000 before the CG.

Expert:  Sam replied 3 years ago.
Hi Robert

Thanks for your response

The annual income relates to the normal income (so excluding the gain ) and if you have these shares held jointly with your wife - then the gain will be £44,750 each with the first £11,000 exempt - leaving £33,750 liable to
Your share 28% = £9450 capital gain tax
Wife's share approx £9263.50

You should alert HMRC to the sale, if you do not already complete self assessment tax returns - so HMRC can arrange to issue these to you after 05/04/2016 (for the tax year 2014/2015)
And you just declare all income, including this capital gain position.
Tax due, will be paid over to HMRC no later than 31/01/2017

Let me know if you have any further questions



Customer: replied 3 years ago.

- I don't quite see where the gain for each of us of £44,750 (presumably your combined £89,500 is £100,500 - £11,000) comes from, since for each of us it's £50,250 - £11,000, to give a taxable gain of £39,250 each, or have I misunderstood?


- I do understand that my liability is 28% on that, but is my wife's subsequent calculation (18%) impacted by her other income being so close to £41,865?


However, I'm really very happy with your service and will use it again, whenever appropriate. Thank you. Robert.

Expert:  Sam replied 3 years ago.
Hi Robert

Thanks for your response, I do apologise - I have allowed the exemption allowance three times instead of two - let me rework this for you

The initial overall gain is £100,500 (the difference between the sale price and the purchase price)
This equates to a gain of £50,250 each
From which £11,000 is the annual exemption leaving a net gain of £39,250

For you the capital gain will be £10990 (all at 28%)
For you wife it will be approx. £10671.50 (you advise that her income is £40,000 a year so the first £3185 of the gain is at 18% and the remaining gain at 28%

Once gain apologies for the miscalculation - I was having a blond moment! And I am pleased that you would be happy to use our service again, If I could trouble you to rate the level of service I have provided, it would be appreciated, as this ensures I am credited for my time.



Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thank you. It's been a very pleasant experience. Robert.

Expert:  Sam replied 3 years ago.
Hi Robert

You are very welcome



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