Capital gains tax

New here (as you know and sorry for the spams so far, getting up to speed very quickly thanks to all of you)

I’ve been using this calculator to check capital gains tax

Can I ask what is the correct way of handling the taxes in case of Invest and CFD accounts ? Keep track of each sale and dividend and sum these at the end of the tax year ? Please let me know how you do it … just don’t want to screw things up and have HMRC after me because I forgot to report £1!

PS Do distributing ETFs pay in cash ? Is there a date that is better waiting for before selling and not miss out on these payments ?


I am happy to help a bit with this as it is a subject I know well. You can also read on HMRC pages:

Firstly, Capital Gain Tax. This is the same for investments in CFD and Invest accounts.

Let’s do an example. Suppose I sell 10 shares of Apple. To figure out my capital gain HMRC says that I should take the proceeds of sale in GBP (using exchange rate on day of sale) and subtract 10 x the per share purchase price (also in GBP using exchange rate at time of purchase) of shares of Apple I have purchased previously or will purchase in the next 30 days. The per share purchase price is calculated by finding the average price as computed within certain categories, in a particular priority order: (1) firstly, any shares of APPL bought the same day, (2) secondly, any shares bought in the 30 days after the sale, (3) finally, any shares bought on previous days. In the case of (3) I am to use the average cost per share, averaged over all the purchases I may have made prior to my sale of shares. This collection of previously purchased shares is called a Section 104 holding.

For typical long term investors only (3) will actually be relevant because all owned shares will be in a Section 104 holding. But beware of (1) in case you sell one day and buy back in a few days later.

If in the course of a tax year I make gains on some sales and losses on other sales, the losses can be netted off against the gains. There is a trap to be aware of. The UK has a £12,300 CG tax free allowance. Suppose I had gains of £14k and losses of £10k. This would net to £4k and I would owe no tax. But I have lost the benefit of the full £12,300 tax free allowance. It would be better to net off only £1700 of losses, leaving £12300 net gains and hence no tax, and then carry the rest of the losses forward to use against gains next year. But this is not allowed. You must put all your losses into the calculation of net gain. However, there is a way around this in that you are not required to declare your losses immediately in the year they took place. You can delay the declaration for 4 years.

I think that covers the main points. Please ask again if any questions remain in your mind.

Obviously, a platform like Trading 212 cannot easily help with capital gains tax calculation. You have your own decisions to make again when to realise gains and losses. I manage this by keeping a Google sheet with lines for each different investment I own: APPL, MSFT, JNJ, etc. I track the date, number of shares bought or sold, price in USD, exchange rate that day and cost or proceeds in GBP. average cost per share of all shares bought in previous days.

Here are the top few lines of an example, showing the information I keep in order to prepare for capital gains tax calculations. This is for ETF SUWS which is priced in USD.

Yes. If you want to receive a dividend then you need to hold the shares until the ex-dividend date. It is best to find the information about dividend amounts and dates by reading on the web site of the ETF provider. iShares, Vanguard, State Street … they all have very informative and easy to use web sites.

In the UK there is a £2000 per year tax free dividend allowance. Taxable dividends arise from ordinary shares and from both distributing and accumulating ETFs.

And of course if I’m under the capital gains allowance I don’t have to declare anything right ? Just if I’m over I need to do self assessment, correct ?


You do need to complete a self-assessment if you are reporting any losses or if your gains before losses are above a certain amount.

Do I need to keep track of anything or literally the CFD account has some statement option somewhere to keep track of buy/sell/profits ? (I haven’t done a trade in the real one yet, just ISA)

Reading this may help.

You probably need to keep your own records. See Results section of the app and trading statements received in email.

So, If I can answer no to both of these I don’t have to do any paperwork right ?

Can you explain the below ?

I can carry losses onto the next year ?

You can declare and apply a loss against gains at any time up to four years after the point the loss was incurred. Also, you can carry losses forward indefinitely, but they must be applied against gains and therefore may reduce the extent to which you can benefit from the £12.3k tax free allowance.

For your peace of mind, I highly recommend a thorough reading of relevant HMRC pages about capital gains tax. It is worth investing time in learning from the source. These pages are well written and include examples.

The following page tells how to handle losses.

Just to see if I understood well. Suppose I use the invest account and buy AAPL or an ETF(distributing).

If I buy and sell and my total gains(excluding losses and dividends) are below the allowance for CGT I don’t have to file any paperwork. Correct ? As long as my total sell amount is under 4x the CGT allowance from what I’ve read.

So say I put in 36.9k in the invest account, it goes up 33% to 49.2, I can then sell everything within the same tax year and I don’t have to fill any paperwork As gains are 12.3 and total sale is 4x the allowance… (I have no other assets or properties just PAYE income and savings)

Is that correct @Richard.W ?

Yes. Correct. But I recommend you also read on HMRC website. Perhaps you will learn something more.