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CGT and section 104 holding

CGT and section 104 holding

Old Mar 2nd 2023, 2:46 pm
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Default CGT and section 104 holding

Hello All
Just returned to UK and still grappling with CGT rules !
Does anyone know if shares acquired before return to UK, and still held, need to be pooled under section 104 rules ?
I thought I had read that shares acquired before return could be sold on First In First Out basis but may well be wrong about this. My brain has gone walkabout dealing with the the return to UK !
Sincere thanks for any input.
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Old Mar 3rd 2023, 10:36 pm
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Default Re: CGT and section 104 holding

I don’t know the answer but I have had lots of shares that I bought before leaving the USA that I subsequently sold and it was actually fairly straightforward. Using historical exchange rates published on XE.com I calculate the cost in GBP and also the exchange rate on the day I sell them gives me the sale proceeds in GBP.
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Old Mar 4th 2023, 5:36 am
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Default Re: CGT and section 104 holding

Originally Posted by travelfar
Hello All
Just returned to UK and still grappling with CGT rules !
Does anyone know if shares acquired before return to UK, and still held, need to be pooled under section 104 rules ?
I thought I had read that shares acquired before return could be sold on First In First Out basis but may well be wrong about this. My brain has gone walkabout dealing with the the return to UK !
Sincere thanks for any input.
This may help: https://www.gov.uk/government/public...akfasting-rule
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Old Mar 4th 2023, 12:55 pm
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Default Re: CGT and section 104 holding

HMRC publishes exchange rates, using these avoids the risk of arguements:
https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2022-monthly
https://www.gov.uk/government/public...and-vat-yearly

The rules on share pooling should be here somewhere:
https://www.gov.uk/government/public...gains-tax-2019

Otherwise, you could try posting the question on a tax forum:
https://community.hmrc.gov.uk/customerforums/
https://www.taxationweb.co.uk/
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Old Mar 7th 2023, 2:56 pm
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Default Re: CGT and section 104 holding

durham lad, Many thanks for your reply. You have a great deal of knowledge and I appreciate your help.
I am wondering if the shares you sold in the UK consisted of a single batch of shares purchased in USA as then I suspect there would be no need to pool ?
My situation is that I have batches of the same share purchased at different times and if I only sold a few of these, I wonder if a pool is required under HMRC rules. Anyway, I realise this is a rather specific question and I may require professional advice.
Interested also that you used XE.com for exchange rates, I was thinking of using daily Bank of England rates. Can I assume HMRC have never questioned the use of daily rates or XE.com ?
Thanks for any further input, however if you prefer not to give further details that is fine too. You are always very helpful on this forum.
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Old Mar 7th 2023, 4:25 pm
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Default Re: CGT and section 104 holding

Thanks tdrinker, wasn't aware of www.taxationweb.co.uk...excellent site.
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Old Mar 7th 2023, 4:33 pm
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Default Re: CGT and section 104 holding

Originally Posted by travelfar
durham lad, Many thanks for your reply. You have a great deal of knowledge and I appreciate your help.
I am wondering if the shares you sold in the UK consisted of a single batch of shares purchased in USA as then I suspect there would be no need to pool ?
My situation is that I have batches of the same share purchased at different times and if I only sold a few of these, I wonder if a pool is required under HMRC rules. Anyway, I realise this is a rather specific question and I may require professional advice.
Interested also that you used XE.com for exchange rates, I was thinking of using daily Bank of England rates. Can I assume HMRC have never questioned the use of daily rates or XE.com ?
Thanks for any further input, however if you prefer not to give further details that is fine too. You are always very helpful on this forum.
For some years before we had even thought about a move to England I had stopped all automatic re-investing of dividends in funds, and also switched to “specific id” for selling, rather than FIFO, LIFO or Average Cost. This means that when I sell a batch of shares from a fund, I select which shares to sell. e.g. I may sell 100 shares from a batch I bought in 2015 and those shares are identified in my brokerage with a purchase date and cost when bought. When reporting the sale on my HMRC return I will indicate “100 shares of VYM” (VYM being the ticker code for the particular ETF fund)

HMRC have never questioned how I determine the value in GBP of shares I bought in the past. I use XE.com for the historic values because that is what I have always done and their lookup feature is extremely easy to use. e.g. I don’t even know how to find the HMRC published exchange rate on October 26, 2014. XE.com was an example of one of the reputable sites listed by the IRS when I looked many years ago
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Old Mar 7th 2023, 6:17 pm
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Default Re: CGT and section 104 holding

Thanks again durham lad. I too used "specific id" when in US. Then moved to Europe where it was not permitted and had to re-state all my gains/losses for 3 years on FIFO basis as my "specific id" calculations were not accepted. This was a genuine mistake on my part due to lack of knowledge/forward thinking ! I am very reluctant to make any such error again thus my questions.
Agree XE.com is easy to use and also agree HMRC do not seem to publish 'official' daily rates although I believe they have no objection in daily rates being used.
I am assuming one should strictly speaking pool batches of the same share purchased before return to UK, but will get a professional opinion on this point.
It is always a pleasure to hear read your posts and know your experiences. Many thanks once again
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Old Mar 9th 2023, 5:19 pm
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Default Re: CGT and section 104 holding

Originally Posted by travelfar
I am assuming one should strictly speaking pool batches of the same share purchased before return to UK, but will get a professional opinion on this point.
The paid advice I received when returning to the UK was all stock of the same company & share-class had to be pooled. We had to go to HRMC to determine whether the pool had to include shares that were both bought and sold while abroad. They don't.

So to summarize:
  1. Ignore lots bought and sold while abroad
  2. For each lot of stock X purchased, find the exchange rate for that date (I used the Bank of England's exchange rates), and convert the lot purchase price to GBP
  3. Total the GBP lot costs
  4. Total the share quantities
  5. Divide #3 by #4 to obtain the HRMC average cost basis.
This average doesn't change if you subsequently sell stock, but it does if you subsequently buy stock (you just add the new lot to the existing figures for #3 & #4, then divide the results as before).
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Old Mar 10th 2023, 9:14 am
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Default Re: CGT and section 104 holding

Thanks for reply AnotherDaveB ...
So am I correct in my understanding
1. shares bought and sold while abroad ignore.
2. shares bought while abroad but not sold go into the pool ?
Just want to make sure I understand 100% !
Many thanks
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Old Mar 10th 2023, 12:00 pm
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Default Re: CGT and section 104 holding

Originally Posted by travelfar
Thanks for reply AnotherDaveB ...
So am I correct in my understanding
1. shares bought and sold while abroad ignore.
2. shares bought while abroad but not sold go into the pool ?
Just want to make sure I understand 100% !
Many thanks
1. Yes. For the record, I'm not sure about shares bought before leaving the UK and sold in the US (other than if you returned to the UK within 5 years, in which case it would and you have back taxes to pay anyway :-)). This scenario didn't apply to me so I didn't ask about it.
2. Yes. Although to be absolutely precise, it's the shares you hold when you become UK tax resident, which may not be the same date as you step foot back in the UK.

[And we should probably do a global search & replace to change 'bought' to 'obtained' as obviously all this applies to shares obtained by stock awards, ESPP, IPOs, gifts, etc as well]

I don't know if you are US citizen / greencard holder, but if so, you've probably aware that on sale of stocks it's recommended to report & pay UK capital gains to HRMC in the same calendar year as the sale (i.e. if you sell between April 6th and December 31st, don't leave it until you UK tax return is due), otherwise it makes both you US tax return and your cashflow harder to manage. If this applies to you and you do a single sale that involved multiple purchase lots, you'll probably attempt to report the gain to HRMC online. That online form has a field named 'date of acquisition'. I wasn't sure what to use here given the shares I sold in one go were accumulated across multiple purchase dates. HRMC clarified for me I only needed to enter one line for that sale, and to use the 'the date you first acquired an interest in the asset', which I've interpreted to mean the earliest purchase date in the S104 pool, which is not necessarily the same things as the earliest purchase date of the stocks actually sold.



Last edited by AnotherDaveB; Mar 10th 2023 at 12:02 pm. Reason: Corrected April 5th -> April 6th
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Old Mar 10th 2023, 2:53 pm
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Default Re: CGT and section 104 holding

Thanks again AnotherDaveB what you wrote is very informative and helpful. The hoops we have to jump through for tax !!
Out of interest when you mentioned 'HMRC clarified for me' may I ask how you contacted them to get clarification. I find when calling I tend to get someone who doesn't have experience or knowledge of the detail in these situations. Is there a way to speak to a 'specialist' ? Thanks
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Old Mar 10th 2023, 3:09 pm
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Default Re: CGT and section 104 holding

Originally Posted by travelfar
Thanks again AnotherDaveB what you wrote is very informative and helpful. The hoops we have to jump through for tax !!
Out of interest when you mentioned 'HMRC clarified for me' may I ask how you contacted them to get clarification. I find when calling I tend to get someone who doesn't have experience or knowledge of the detail in these situations. Is there a way to speak to a 'specialist' ? Thanks
I know what you mean. I once submitted a question through their main website and waited 3 months for a response, only to get the pointed to the very document I was asking to be clarified.

I've had much better experience posting questions to h t t p s : / / community.hmrc.gov.uk/customerforums/ (sorry for the strange formatting, apparently I haven't reached the number of posts needed o be allowed to include URLs in my posts).It can still take several days to get a reply, and sometimes they answer a different question to what you ask and you have to push back, but otherwise 5 stars. Do take a printout of any response you get though as questions do appear to age off.
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Old Mar 10th 2023, 5:57 pm
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Default Re: CGT and section 104 holding

Thank you. My experience exactly !
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