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Pokerchips, when you sell part of your shareholding you can't choose which shares you've sold. You have to follow the matching rules, which I imagine is what your broker does (unless your holding is spread over more than one broker which will require a manual calculation).
If dividends are reinvested this is treated as 2 transactions for tax purposes. The amount of the dividend as income and the amount of the dividend reinvested as a share purchase for that cost.
Reader61
" HMRC do not make accounting easy, there are several rules around identifying which shares belong to which trade (30 day rule, section 104 holding, same day trades etc) "
Systems are moving towards being able to record each trade directly into a tax return....which then produces a final summary for each company and works out the tax due....
I have a Santander account in Spain for Euro and have bought shares with their broker account.....the trades appeared directly in my online tax return when I came to make a filing ..dividends as well... all automated and connected
Thank you Pokerchips. HMRC do not make accounting easy, there are several rules around identifying which shares belong to which trade (30 day rule, section 104 holding, same day trades etc). It becomes fearsomely complex if you trade often or when things change such as with GSK. I found and use a free piece of software which manages these issues but you have to input the correct data, hence my grapple to understand GSK metrics. As others have pointed out, there will doubtless be guidance nearer the time.
alex1621
From experience I often have to change the cost price on the portfolio ..simply because it doesn't remain correct ( which is why there is the possibility to change it) .... dividends that are "free" are often indicated as being paid for....and if I sell one or two trades out of say 10 trades in a share ...then the cost price again doesn't seem to reflect what the "new" left over cost price is ..because the system doesn't know which of the trades I will choose as "sold"
-... I tend to be a little wary of allowing the broker system doing the working out...myself ...
I guess making sure it is all 100% correct before the split day ..will assist in the change over and having the figures correctly represented
Thank you for the replies, I've attached a link which describes an example of tax treatment. It implies it should be free of CGT/Income tax. Therefore, should I make any sells of GSK1 at the new, presumably lower share price my CGT liability will be less. Additionally, I shall show the GSK2 shares on my return as a straight forward buy at the cost price of the demerger. I think that makes sense? This is of course holdings outside ISA - If only I could get them all in to that wrapper huh!
https://www.taxinsider.co.uk/breaking-up-is-hard-to-do-splitting-a-company
The other thing I meant to say is that you don’t have to do these calculations, as you will see them in your brokerage account on the day of the split. When you look at your account you will see how many shares you have in each company and what the cost price is. So no need to worry.
The media will post info on "tax" implications much nearer the time....giving examples....once more split allocations are known.... the whole "split" detail will come out all over again nearer the time... as they say...it isn't due until MID 2022
...for now..stick to finding yourself a Xmas Turkey ..while you still can :-)
No, they are not free from tax. But that is actually a good question. I’d guess you go from one pool of GSK shares to two pools, one for new Pharma, and one for Consumer.
The difficulty for Capital Gains Tax purposes is what “cost of shares” do you use if you are selling either company shares. If you bought 10 shares of Glaxo at an average £14, you will end up with 10 shares of New Pharma and 10 shares of Consumer, presuming its a one for one split. The allocation of £14 between each share will depend on how the company value both divisions. So if 60% New Pharma and 40% Consumer your cost price will be £8.40 for the former and £5.60 for the latter. And that is the cost price you use when calculating the capital gain. This information will no doubt be published closer to the split.
So how is this treated then regarding tax reporting for my return? If I'm given new shares in the split, presumably my old shares are worth less so I've not actually gained have I? Do I thus assume the new shares are free gratis of tax?