travelfar

Capital Gains Tax advice please !
I have lived outside the UK for 12 years. If I became resident in UK under SRT rules on say 1 January 2023, would the cost basis of shares purchased prior to my return be the original cost on date of purchase or would HMRC require that the cost was adjusted to the 1 January 2023 value ?
Or, perhaps there is a choice ?
Thanks in advance for any help with this.

cyrian

I own a property in France which will be subject to French CGT when it is sold.
I will also have to declare the Gain to HMRC stating the original cost price of the property which HMRC will use to calculate any CGT due in the UK.
I am UK tax resident.
Applying the same logic to your situation, you would need to declare the original cost of the shares.
Remember that you have a personal CGT tax-free allowance of £12,300 in each tax year.
There is no tax due on spousal transfers which would allow you to transfer some shares to a spouse and therefore have £24,600 tax free each year.
You would have to calculate if it is cheaper to sell the shares under your current country's rules while you are tax resident or return to the UK and then sell the shares in the most advantageous way.
The UK tax year runs from April 6th to April 5th.
I normally get a CGT position from my account manager each March to maximise my CGT allowance.
As a UK resident, you can put £20k (£40k per couple) of shares into an ISA wrapper which mean that there is no future income tax or CGT liability.
HTH

durham_lad

Since moving back to the UK 6 years ago we have sold shares that we purchased years before. You need to know the purchase price and date of purchase plus the exchange rate on the day of purchase and day they were sold since everything has to be calculated in GBP.

xe.com has historical exchange rate tables so that is easy to look up.

travelfar

Thanks durham-lad.
In UK does the exchange rate at date of purchase have to be on the exact date of purchase ? Or, as in some countries, the monthly average or indeed the annual average exchange rate acceptable ? Perhaps on can choose in UK and if so, does one have to be consistent year on year I wonder ? This can make a large difference to gain or loss achieved.
Thanks again for your input, much appreciated.

travelfar

Thanks Cyrian for confirming what I guessed, but was unsure, was correct.

durham_lad

I can’t answer that but I would suggest consistency is key. For example suppose you bought a load of shares on the same day then over a number of years in the future started selling them, you would want to keep the same purchase price/share each time you sold otherwise HMRC computers may detect that something is amiss. I use Vanguard and have shares in ETF funds that I accumulated while working and am now slowly selling them off, keeping taxes at a minimum. I choose which shares to sell and in the annual tax document Vanguard issues it specifies the exact date the shares were bought and sold. Having looked up the exchange rate on the dates of purchases specified I use that same rate every time I sell shares with that same purchase date. I also use the same source for the exchange rate although I doubt HMRC will notice that you used the xe.com rate for the purchase date and the HMRC monthly average rate for the date of sale.

tdrinker

If you are going to get a large capital gain (i.e. above the CGT allowance), you could consider selling the shares before you return to generate the gain whilst non-tax resident. You could always buy the shares back again if desired to se-set the clock, but check the CGT rules on how soon you can re-buy as there may be a delay required (there is a risk the shares price will increase in the meantime).

durham_lad

Yes, don’t fall into the “wash sale” rules by selling at a loss then immediately repurchasing the shares. I believe that the wait period is 30 days.

https://www.investopedia.com/terms/w/washsalerule.asp

tdrinker

If you have a capital loss, best wait until a UK resident to sell and have the loss available to offset against gains elsewhere or carry forwards. But the concept is the same - bed and breakfasting. You can't sell shares to crystalise a gain (and utilise the an annual CGT allowance) and immediately re-buy them to re-set the purchase price to a higher level. There has to be a 30+ day gap between sale and re-purchase.

travelfar

Thank you to all, you have helped a great deal with this.
Mention of buy back date and wash sale jogged my memory of this rule so very much appreciated.