capital gains allowance

[dancecaller]

I have some shares held jointly with my husband. If I sold them all or transfered them to children there would be a capital gain as the stock market has risen a lot since we were given them in 1999. Would we both have a capital gains allowance?

[dennis m]

Your allowance is �8,500 each. If the total gains are less than this they are exempt.

[dancecaller]

But if the are more than this would �17,000 be exempt?

[dennis m]

Of course, �17,000 is your joint exemption and their are also other allowances that I am sure will exempt any gain. This new allowance is a % of your total gain and I believe that you would qualify for a 25% allowance on the total gain before you take off the �17,000.

[dancecaller]

May be I'm confused because if you transfer shares that were in one name to the other name you dont get any capital gain till you sell. So could you transfer shares from a single name to a joint name and get double allowances?

[dancecaller]

Between husband and wife, that is. If I got've it right

[dancecaller]

The IR website confuses me.

It looks as if, for a basic rate tax payer capital gains tax is 40%. Is this right?

[kags]

The total gain is the sale proceeds, less the allowable cost - the allowable cost will depend on who gave you the shares. Costs of sale are also deductable. The gains is then given a taper relief, which increases with the length of ownership - for 7 complete years of ownership, 25% of the gain is exempt, as mentioned above.

Once the gain is calculated this way, it is split between you and your husband, and you both have the �8500 annual exempt amount. Any remaining gain is added to your taxable income for the year, and taxed as if it were the top slice - except that where if falls within the basic rate band, gains are taxed at 20%, rather than 22%.

[dzug]

Check your share prices carefully - the Stock Market as a whole hasn't risen a lot since 1999 - it's at roughly the same level (6000+). Some shares have risen a lot it's true, but others have gone down and some have gone bust entirely.

[dancecaller]

Yes I'll check prices and dates before acting.

I know the prices where at the top when mother-in-law bought them, then everything crasshed before she gave them to us. They've been climbing back since.

[dancecaller]

Oh, they've fallen a bit in the month since I last checked