How do you work out your capital gains?


#1

If you use the normal (non-ISA) Freetrade account to buy the same ETF every month, then a few years down the line you sell enough of it to get a certain amount of cash.

How would you go about working out your capital gains from that?

If you only had to sell less than you bought that month, the gains would be what the ETF gained that month, right?

If you had to sell multiple months worth of the ETF, do you go back month by month and calculate the gains on that month’s worth?

This seems like it might be really difficult to get right. Is, or will there be, a Freetrade feature to make it easy?


(Jim) #2

I’m sure you’ll be investing via a Freetrade ISA so there’ll be no CGT implications :wink:

If not…
HMRC Guidelines


#3

(I won’t be using the ISA personally; I’d get a JISA if Freetrade offered one, and my wife will get the ISA for our shared investments. I doubt my personal investments are going to exceed the capital gains allowance, so I can save the ISA fee for now.)

Ah, so basically you need to know:

  1. How many shares of the ETF you have in total.
  2. How much you spent on those shares in total.
  3. How many shares you need to sell to get the amount you want.

I’ve not bought or sold anything in Freetrade yet, so can someone tell me if these 3 things are easy to find out?


(Jim) #4

If all your calculated gains over the year are < £11700 ( current rules ) then your liability will be 0. Any losses can be offset - I’m still holding onto virtually worthless RBS shares for this reason…


#5

Yes, it’s a matter of knowing when it starts getting over £11700 (or future allowance), so you can switch to ISA.


(Ben #88) #6

Capitals Gains is worked out when you sell. So if you sell this tax year, you will pay tax on it (gains/profit) this tax year. It makes no difference when you bought the shares.

It’s the main reason you should pretty much always go down the ISA route (personally).


(Joe) #7

It’s worked out when you sell. So if you bought £10,000 worth of shares. You’d need to sell them for £22,000 to have to declare any gains as you’d then be over the £11,700 capital gains tax allowance


#8

Sure, my question was more about “how do you work out what you bought all the shares (that you just sold) for”, if you’ve been buying them at different prices in different amounts over many buys and many years.

HMRC just wants you to take an average price, which is easy to calculate if you have the figures in my numbered list above; does Freetrade provide those figures easily?


(Joe) #9

Oh I see sorry I misread that. Yes Freetrade shows you an average price when you click on the shares in your portfolio. As you can see I have 18 shares in this ETF. Current value is £385. Avg. price per share £20.61 . This is the average price that I purchased the shares at over multiple ‘buys’.