Is the “average cost” supposed to match the idea of a Section 104 holding value?
I’ve been keeping track of buy/sell events in my wife and my investment account for our tax returns (we are hign earners so the 2x £20k ISA limit just gets used up in April). We need to maintain a S104 in which to work out capital gains. This is annoying but all part of reporting tax.
T212 provides an “average cost” value which for my wife’s account in GBP is almost exactly the same as our calculations (only off by pennies so I assume just differences in agreed exchange rate sources, the odd minor rounding etc). I’m happy to use either versions for HMRC… Except for one of them.
We bought and sold SPY5 on the same day. This event is a same-day match by HMRC and as such essentially cancelled out, give or take a minute few quid gain due to a fluctuation on the price. This was 440 SPY5 and then sold 300 SPY5. So should equate to 140 SPY5 at that USD value and the day-rate for £:$. As far as I can see T212 has simply taken the 440 SPY5 and added it to the “average cost” value. Indeed if I ignore the sale event, then our maths aligns with them. However this would only be valid if that sale were the following day and we didn’t them repurchase within 30 days (B&B rules).
So as far as I can tell, T212 is providing a value which looks like it’s useful, but is not useful at all, or is perhaps not intended to be used for assisting with tax calculations. Or it is, but it’s implemented incorrectly. This is concerning for tax reporting purposes, I realise they provide one (and legally need to), but I’m going to have to pay close attention to the values to double check them all. If this is right then the “average cost” is just displayed wrong and/or was never for help with tax.
My account, I set USD as the main currency as I’m saving up for an expensive USD purchase and wanted to watch the markets move up/down in USD and when I realise assets didn’t want to be affected at a time when the GBP:USD rate meant I’d be losing to currency fluctuations.
What this means is that the “average cost” is in USD, and as far as I can tell this isn’t the GBP value on each Buy/Sell event simply converted for me on the day I look at it, into a USD value. No, it seems they’ve only kept the USD averages. This is completely useless and I have to manually calculate my S104 by hand.