Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
m14
''and probably only against *the same kind of* capital gains (so gains on share sales, but not, for example, gains on a house sale). ''
As far as I know, it doesn't matter where the gain/loss has been obtained.
M14
cannot remember if Vodafone created 'B' shares to give a choice. Most likely did.
The Tesco special of course can only be either an 'income' dividend' or a 'capital' dividend. I will be treating it as a capital dividend as its proceeds from an asset sale .
If I had bought a further £18,800 worth of Tesco yesterday out of my capital, I will not wish to pay income tax on £5,090 of it when they return that much of my capital back to me.
Mike,
That's great as some people like me are new to this kind of dealing and don't want to ask questions about tax implications etc . .
It's all good knowledge and once again, thank you for your time Mike!
Regards
Nigel :)
Nigel,
Finally, this should explain it all:-
https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2020
I'll stop now before anyone reminds me - rightly - that this might be going a bit off-topic.
ATB, Mike.
Mike,
Yes will do! Cheers for the link!
Nige :)
Nigel,
This is the thing about averaging the cost of the shares in one company if you bought them in different tranches at different prices:-
https://www.gov.uk/tax-sell-shares/same-company
Of course, when you work out the buying cost, make sure you include the broker fee (if any), Stamp Duty (usually 0.5% added to the price of the shares), etc. And similarly, make sure the proceeds stated have the broker fee deducted. (So if you sell 100 shares at £2-40 and the broker fee is £9, the "proceeds" figure to use is £231).
Mike.
Nigel,
This should be a start:-
https://www.gov.uk/capital-gains-tax/losses
This is arguably going a bit "off topic" for a Tesco board, but relevant if for example people are baling out from Tesco shares at a loss.
Unless they've changed it again, how it worked when I last did a capital loss was you pool all your holdings of the same type of share (eg Tesco) into a pool of shares called a "Section 104 holding", and they're all treated as having the same average buying price regardless of whether you bought them in different tranches at different dates at different prices. This system came in in about 2008. Before that, it worked on a "first in, first out" (or maybe it was "first in, last out"?) basis.
If I find anything else, I'll post it.
Mike.
Brilliant Mike,
Thank you - every little helps!!
:)
Nigel
Brilliant Mike,
Thank you - every little helps!!
:)
Nigel
Nige,
I'll look on the HMRC website and post a link - if this LSE site allows me to do that. Unfortunately my broker didn't provide anything to me to certify any losses I made on share sales - I had to provide my own spreadsheets to HMRC, but they seemed to be happy with what I sent them. Certainly though it's worth waiting until April to see if your broker does provide you with a statement or something.
Mike.
Mike cheers again! Will definitely look into how I register my capital loss!! I presume it will be on my statement from HL in April!!
Nige :)
Hi again Nige,
Re loss on Lloyds shares, unfortunately you can't offset such a loss against dividend income. You can only use it against capital gains elsewhere, and probably only against *the same kind of* capital gains (so gains on share sales, but not, for example, gains on a house sale). It's important to "register" the loss with HMRC as soon as practicable, and I think you can do this whether or not you're doing self-assessment. You can't, to my knowledge, get an immediate refund in the form of cash back, so it's a bit like a credit note.
Once you've registered the loss, and which year it occurred in, you can keep carrying it forward several years (I don't know off hand how many), which is great if you make big gains on shares in the future (but this is getting less and less likely by the way things are going!).
Cheers,
Mike.
Thanks Longtime investor.
I agree with everything you say in this and subsequent posts (I'm still going through all the recent ones!) about capital returns that should *not* be treated as income.
Re Vodafone, not to get off topic on this TSCO board but if it's the same one as mine, it was a big one when they sold off Verizon (or part of Verizon JV). From memory, without going back to my old notes at the time, they did that with "A" shares, "B" shares etc, but I may be thinking of something else.
Rgds,
Mike.
Anyone is free to ask Tesco if they are giving 50.9p per share to shareholders out of income generated from the business .
It is a matter for the individual if they wish to pay income tax on the proceeds from an asset sale. 'Every little helps' with the UK finances
ECR
''is clearly a dividend''
You can have a 'capital' dividend as opposed to an 'income' dividend
Long time
My mistake For buyback please read "special dividend"
As for a theoretical cash offer for the whole of Tesco, the proceeds would come under capital gains assessment. which as we know has a tax free allowance infinitely more generous than the current £2000 tax free divi allowance. HMRC would treat it as a normal holding sale. ie capital sale.
However Tescos SD -call it a "partial asset sale" - is clearly a dividend, as irs name suggests, and would be treated as income for tax assessment., even if you reinvest it thru DRIP. HMRC run a tight ship and are aware of loopholes designed to reduce tax liabilty.
''calling this a "special dividend"
it is. you can call it anything you like, but essentially it is not income from an asset, it is proceeds from the sale of an asset - a capital return.
also
capital losses offset capital gains not income..
Net capital losses can be used against gains in subsequent years
My loss on Lloyd's came off my capital!! :(
So probably can't offset it against future earnings within this tax years tax!?
Nige
To Longtimeinvester,
Ok, everyone seems to be calling this a "special dividend", which apparently will create tax implications!?
Cheers
Nige
If you let out a property, the rent paid would be income.
If the property was sold, the proceeds would be a return of capital.
Simple enough to distinguish
ECR
''Because the buyback ''
There is no buyback of shares taking place.
If you are calling the return/consolidation a buyback, then why do you consider it to be income at the same time. A buyback of shares in the market for cancellation does not result in any income tax obligations for a shareholder.
Mike,
Haha . . . You've been a star matey!
I made a loss on some Lloyd's shares recently of around 8k, I panick-sold!! :(
Should this loss come off any dividend tax payment Mike,
when or if I have to do a self assessment??
Cheers
Nige
If Tesco sold all the rest of the assets (ie the whole company) on a cash offer for Tesco at 300p per share, would any person put down the capital proceeds down as income?. I think not. So why would you put down a partial asset sale down as income on your tax return.
M14
Your simplistic example is all that was required.
''I'll wait and see what my end-of-year consolidated tax certificate from my broker looks like''
I bought some more Tesco shares yesterday. I will NOT be paying income tax on this capital outlay when some of it is returned back to me.
Had a similar situation in the past with Vodafone when they returned proceeds from an asset sale. I did NOT pay income tax on that capital return.
'' there is no "ex-dividend but pre-consolidation" stage.''
No, as they take place simultaneously , but as I mentioned earlier a 'This is money' portfolio is currently showing a price at an in-between stage