Have you sold or disposed of any shares in the past few years and made a profit? If yes, did you remember to disclose the sale of shares on your annual self-assessment tax return?
Any sale of shares must be declared on your self-assessment tax return, as Capital Gains Tax (CGT) may be due.
HMRC has now written to taxpayers who have failed to disclose the disposal or sale of shares and who may be liable to pay Capital Gains Tax. Taxpayers will have up to 60 days from the date they receive the letter to amend their tax return and pay any CGT due.
What is Capital Gains Tax
To fully understand what CGT is and when it becomes payable, read our article, which outlines all the information you need. This article also contains information on how to reduce the CGT payable on your shares.
The Definition of The Disposal of Shares
You make a disposal when you:
- sell shares for cash
- exchange shares in one company for shares in another company
- give shares away
CGT may not be liable in situations such as where the gains are below the annual exemption amount.
Capital Gains Tax Allowances
In the 2022/2023 tax year, the allowance was £12,300.
In the 2023/24 tax year, the allowance decreased to £6,000.
And from April 2024, this has been reduced further to £3000
Many are unaware of this decrease and have not disclosed the disposal of shares and paid the necessary fees due.
Should the above apply to you and you have disposed of shares but do not believe you are liable to pay any CGT, an explanation needs to be submitted in writing to HMRC. Evidence will also need to be supplied.
How To Amend a Self-Assessment Return
Should you identify you need to amend your self-assessment tax return, or you received a letter from HMRC advising you of such, visit the Gov.uk website, sign in with your Government Gateway user ID and password and follow the instructions.
If you find, when amending your self-assessment, that you made a loss on the disposal of your shares, you may be able to use this to reduce the CGT due on other gains.
What If You Are Too Late To Amend Your Tax Return
For those who did not disclose the disposal of shares and are too late to amend their tax return to reflect the disposal, a letter will be sent from HMRC with instructions on what action to take. This will involve raising an assessment if CGT is due, and interest may be charged on any overdue amount.
What Next
Act quickly if you receive a letter from HMRC to avoid any penalties or tax investigations.
If you have received a letter from HMRC and/or need help determining whether you owe CGT, contact Maynard Johns Chartered Accountants. One of our specialist team will be pleased to help. We can also help you identify if reducing the amount of any capital gains owed is possible