This guide will help you calculate capital gains and losses if you sell or otherwise dispose of shares, securities and debentures in the 2013-14 tax year. There are some examples that will help you get your Capital Gains Tax right.
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You must work out the gain or loss separately for each type of share when you sell, give away, exchange or otherwise dispose of them. This step-by-step guide explains how to do that in straightforward cases.
If you sell or dispose of other types of assets in 2013-14, you must work out each gain or loss separately. Then you can work out your overall gains or losses.
You can find help on working out capital gains on property, personal possessions and business assets in the 'More useful links' section below.
The amount received for your shares is usually the sale price. This is the amount of money you received for the shares when you sold or disposed of them. However, sometimes you need to use the market value of the shares instead of the sale price. The market value is the price the shares might reasonably be expected to have fetched on a sale in the open market.
If your shares have lost all or most of their value, you may be able to make a claim that the shares are worthless or almost worthless. This is known as a 'Negligible Value Claim'. You then use the amount specified in the claim. See the link below for more on this.
You use the market value of the shares instead of the sale price if, for example:
If you sell or give shares to your husband, wife or civil partner you usually won't have to pay any Capital Gains Tax on that disposal. You must have lived together for at least part of the tax year in which you make the disposal.
This does not apply to other people you're connected with (for example your brother).
This does not apply if you're separated for the whole of the year in which the disposal occurs. You must use the market value of the shares disposed of, at the date of disposal, as the amount received.
The cost of your shares is normally the amount you paid for them when you bought or acquired them.
However, sometimes you need to use the market value of the shares instead of the cost. The market value is the price your shares might reasonably have been expected to have fetched on a sale in the open market.
See the link below if you've disposed of some but not all shares you hold of the same type and in the same company.
You use the market value of the shares instead of the cost if:
If you received the shares from your husband, wife or civil partner when you were living together, you usually use the amount the shares cost them.
But if your husband, wife or civil partner owned the asset at 31 March 1982, you use the market value on that day instead.
HM Revenue & Customs (HMRC) can check your valuation, to help you complete your Self Assessment tax return. To request this complete form CG34 Post Transaction Valuation Check after you've disposed of the shares. Form CG34 contains the address you should send it to.
Please allow at least two months for HMRC to check the valuation.
If you've spent extra money to buy or sell your shares, you can deduct certain costs.
Costs you can deduct include:
In June 2002 you bought some shares for £50,000.
You paid £2,000 in fees to buy the shares.
In June 2013 you sold the shares for £200,000.
From the amount you sold the shares for (£200,000) take away the amount you paid for them (£50,000) along with the cost of the fees (£2,000).
So your gain before applying any reliefs is £148,000 (£200,000 - £50,000 - £2,000).
If you had sold the shares for £40,000, you would have made a loss of £12,000 instead (£40,000 - £50,000 - £2,000 costs).
If you've worked out that, so far, you've made a gain, there are tax reliefs that may reduce or postpone that gain.
For example the following reliefs may be available:
There are specific rules for your shares to count as business assets and these rules vary depending on the type of relief. See the link below for more on this.
Through steps 1 to 5, you've worked out the gain or loss on your shares and applied reliefs.
If you sell or dispose of other assets in 2013-14, repeat these steps to work out the separate gain or loss for each asset.
See the 'More useful links' section below for more help on:
In most cases:
Mr P made gains in 2013-14 of £70,900 from disposals.
The Annual Exempt Amount for individuals for 2013-14 is £10,900.
Mr P's gains are above this amount - so he deducts the Annual Exempt Amount from his gains.
He is liable to tax on £60,000 (£70,900 - £10,900).
Mr P is a higher rate tax payer so the Capital Gains Tax rate is 28%.
He must pay Capital Gains Tax of £16,800 (£60,000 x 28%).