CGT calculation is a nightmare under the matching rules. These say that you have to match shares sold with purchases in a specific order, in a mix of Last in First out and matching to future purchases in the next 30 days. CGT applies to the net effect of all sales; the need to calculate it is perhaps more common than is widely appreciated..

This becomes difficult where you have partial sales of holdings and have to allocate the costs against part of a previous purchase. When you sell more of the shares you neeed to know how many are left of the original tranche and what price they were bought at. This tracking becomes more involved if there are multiple purchases.

To use CGT allowances you need to be able to forecast your CGT position in advance of the year end (and probably work out what transaction is needed to use the allowances).

I've been searching for a solution that was reasonably priced and compatible with the output from an online broker. (which this method isn't.)

My answer is to use MS Money to track the gains and excel to work out taper refief. At the end you know how much gain you have used and can input a theoretical transaction to check before making a sale.

Money 2000 has a slightly obscure option which asks about the basis for computing CGT; I think the default is FIFO and wrong. (Investments > Options >Investments >Investment options and uncheck the box "Track all investments as FIFO"). Once this is unset when you make a sale it will ask which purchase you wish to set it against (ie you need to know the matching rules). This cannot account for shares re-purchased later so its best not to repurchase within 30 days or buy something new.

Money's Tax report of capital gains should now be accurate. From there its possible to right click, copy and paste the contents into a spreadsheet. A couple of formula's to work out the age of the holdings and a vlookup to pull in the taper relief factor (gains only) leaves you with a net figure of CGT chargeable. At this stage you can fiddle to see how much headroom you have; this might mean entering a transaction in money and inputting it on the apreadsheet to see its effect (though obviously you can run the two in parallel).

The downside to this apprach is that you have to apply the matching rules manually and probably input each transaction.

Hope this helps someone (apart from me.. I asked a while back)

BF

My prog at http://homepage.ntlworld.com/stonebanks/cgt.htm does the difficult calculations and shows you what it has done so that you can check the figures.

It doesn't calc indexation 'cos (a) I have never held shares long enough and (b) the calcs are different for AIM stocks. But the amendments to your return shouldn't be difficult.

I used this last year (with no objections) and have just submitted returns for this year using this prog.

It looks like a lot of work has gone into that.

Couple of things:
1, Its matching of repurchases is better than Money. Basically Money 2000 can't do this and you don't seem to be able to match repurchases after input either.

2, An online calculator has to deal with all shares where there's been a sale in the tax year. Its dependant on it being available in future years as no history of lot allocation is retained. This is reasonable in the circumstances (and good for ad-hoc checking) but might be tricky over multiple years.

3, The formatting is quite definite; is this based on the ouput from a particular source?

4, Indexation is not too hard to work out but it doesn't apply to losses. The indexation factor is based on the number of complete years of ownership (so 2.7 years is truncated to 2) and the value can be read off a table/array.

Well done. I'm impressed (excel is about my limit),

Cheers,

BF

"2, An online calculator has to deal with all shares where there's been a sale in the tax year."

I only tell the taxman about sales. I should add a bit of code to add total sale proceeds - maybe another time.

"Its dependant on it being available in future years as no history of lot allocation is retained. This is reasonable in the circumstances (and good for ad-hoc checking) but might be tricky over multiple years."

Whenever I make a purchase or sale, I add it to my file mycg0506 (for example) then at the end of the tax year, create a new file mycg0607. I then delete sales and corresponding purchases from the new file and delete those kept from the old file. I have to doctor the new file where I have sold part of a purchase.

"3, The formatting is quite definite; is this based on the output from a particular source?"

No, it is the minimum that I could get away with.

"4, Indexation is not too hard to work out but it doesn't apply to losses. The indexation factor is based on the number of complete years of ownership (so 2.7 years is truncated to 2) and the value can be read off a table/array."

The prog reports complete years held. Another reason for not including indexation is that I can't be sure that the rates won't change.

Just a note on point 4.

Indexation is worked out using the RPI on the date of acquistion and date of disposal. There are no cirmunstances when indexation is truncated to whole number of years ( personl tax indexation stopped at April 98).

I think your getting taper relief and indexation mixed up.

"I think your getting taper relief and indexation mixed up."

Your are correct. Sorry I did indeed mean taper relief.

Fortnueatly shares are not classed as business assets and there is only one taper relief table to apply.

BF

"I have to doctor the new file where I have sold part of a purchase."

I think this is the most awkward aspect and probably the area where Money is most usefull. As usual there are many ways to do a thing and the expertise of the person doing it has a big impact on the most appropriate method. (In fact Money could probably generate inputs to your calculator)

Sometimes people write an excel cashbook to keep a businesses accounts and sometimes they write a full database application to do the same. Other people simply buy a copy of Sage Instant and adapt their methods to use it.

The latter approach is often better in the sense that putting together an equivalent application requires expertise and knowledge. An off the self application splits that cost over many users. A wider user base tends to require a more user friendly approach and better support channels.

Not sure that this has much to do with CGT though :)
Cheers,

BF

Fortnueatly shares are not classed as business assets and there is only one taper relief table to apply.

That depends - sometimes they are.

http://www.hmrc.gov.uk/leaflets/cgt1.htm#g explains.

HV

Strewth... its horrendously complex.

Cheers everyone,

BF

me ""I have to doctor the new file where I have sold part of a purchase.""

BarrenFluffit "I think this is the most awkward aspect and probably the area where Money is most usefull."

Simply replace original purchase quantity with 'kept' quantity and change cost (as a proportion of the original purchase) as reported by the prog in your file for the following year.

At #18476, I said "My prog at http://homepage.ntlworld.com/stonebanks/cgt.htm does the difficult calculations and shows you what it has done so that you can check the figures.

It doesn't calc indexation 'cos (a) I have never held shares long enough and (b) the calcs are different for AIM stocks. But the amendments to your return shouldn't be difficult.

I used this last year (with no objections) and have just submitted returns for this year using this prog."

The taxman has accepted my calcs for gains and losses this year. Fortunately, tax due is less than I had been expecting 'cos my income is low, so some of the gains have been charged at less than 40%.

"The taxman has accepted my calcs for gains and losses this year."

Under self assessment they assume its right and probably only check calculations if there's an enquiry. Given the effort these calculations take I'd be surprised if the IR felt it was worth checking in detail unless they looked odd or the amounts were particularly large.

At an average stock market return of 7% a portfolio of £120 K or so generates taxable gains each year. If you don't use your CGT allowance each year that portfolio size could be anything down to £1.

It seems to me that there are useful benefits available from actively managing your CGT position.

BF