Help... Capital gains for individuals

Paisley

Hi all

I'm going round in circles with this question. Any help would be appreciated!


Adam purchased and sold shares in Beeco Ltd as follows:

15/04/05 Purchased 5,600 shares for £14,560
12/01/10 Sold 1,400 shares for £4,060
01/02/10 Purchased 2,800 shares for £6,160
31/03/10 Sold 7,000 shares for £20,000


Answers:

(a) The gain on the sale of shares on 12 January 2010 is £980

(b) The gain on the sale of shares on 31 March 2010 is £2,360


Thanks

pirate

So purchase on 01/02/10 is matched with the sale on 12/01/10 ( as it 30 days after)

So the pool will have a total of 7000 shares worth £17640

So then he sells the shares for £20000 so as the cost is £17640 gain therefore £2360

there wont be any Capital Gains

are these the actual answers from the book as I wouldnt calculate a gain on A, as they were matched

Woooof

For sales of shares:

1) You use any shares purchased on same day of sale
2) You use shares purchased after 30 days of sale
3) You use the pool of shares

So a) is:

£6,160 / 2,800 shares = £2.20 per share

£4,060 - (1,400 * £2.20) = £980 gain

Hopefully you can work b out from that info

Edit: Beaten to it

Monsoon

pirate wrote: »

are these the actual answers from the book as I wouldnt calculate a gain on A, as they were matched

Why would you not calculate a gain on A? I don't know if I've misunderstood your answer, but I agree that the first sale is matched with shares bought in the next 30 days. There is still a gain on that sale and thus it needs calculating, as per Woooofs answer.

I don't profess to be an expert in CGT on shares, but I don't think I've missed anything. Have I?!

(not near a calculator right now)

Woooof

Monsoon wrote: »

Why would you not calculate a gain on A? I don't know if I've misunderstood your answer, but I agree that the first sale is matched with shares bought in the next 30 days. There is still a gain on that sale and thus it needs calculating, as per Woooofs answer.

I don't profess to be an expert in CGT on shares, but I don't think I've missed anything. Have I?!

(not near a calculator right now)

I don't understand why you wouldn't calculate a gain on A either And I did my Personal Tax exam yesterday so I'm hoping I followed the correct rules!

Paisley

pirate wrote: »

are these the actual answers from the book as I wouldnt calculate a gain on A, as they were matched

Yes these are the answers according to Osborne.

Paisley

Woooof wrote: »

For sales of shares:

1) You use any shares purchased on same day of sale
2) You use shares purchased after 30 days of sale
3) You use the pool of shares

So a) is:

£6,160 / 2,800 shares = £2.20 per share

£4,060 - (1,400 * £2.20) = £980 gain

Hopefully you can work b out from that info

Edit: Beaten to it

Thanks Woooof, I just tried it again and have the same figures now!

pirate

Jenni

I would expect to do a gain miswrote it I think was meant to say I would expect to use the pool to work out the cost of the disposal.

but I would agree that his proceeds on shares sold on the12.01.10 are £6160 and are matched against the shares bougt on 01/02/10 in terms of cost so they would deemed to have cost £2.20 each therefore total cost of disposed shares is £3080

So Proceeds of sold 12/01/10 Sold £4,060
cost of share is £3,080
therfore Gain £980

Does that help Paisley or have I confused you totally

Monsoon

Ah that's ok, I fully agree with you now thanks!

Paisley

pirate wrote: »

Does that help Paisley or have I confused you totally

It's clearer than it was earlier! Thanks pirate