Selling shares and other assets

Will I get a capital gain if I sell some shares?

Below we try to explain as simply as possible the rules that apply to the purchase and disposal of your shares in public companies such as BT Group plc or Tesco plc. It is intended to help you work out the capital gain or loss if you have disposed of shares. For most people, with modest shareholdings, any gain from the sale of shares will probably fall within the annual CGT exempt amount.

We normally refer to purchases and sales as these will be the most common events, but remember that a CGT charge can also arise when shares are gifted.

If your circumstances are more complicated – for example if there has been a reorganisation of your shareholding by the company involved or if you got some free shares – you should talk to HMRC or seek professional advice.

Shares of the same class in the same company are identical. Suppose you have a holding of 10,000 Agapanthys plc 25p ordinary shares acquired at different times for different prices. You then sell 2,000 shares. To calculate the gain, you need to know firstly, which shares you have sold and secondly, how much they cost.

For historical reasons, shares of the same class in the same company may be grouped in different ways. The following list shows the order that identifies which shares you have sold:

1. Purchases on the same day as the sale or disposal
2. Purchases within 30 days after the day of sale or disposal
3. The rest of the shares you hold (these are treated as being held in a pool and acquired at their average price)
4. Purchases more than 30 days after the day of sale or disposal.

Any shares you held before 31 March 1982 are treated as if you bought them at what they would have cost on that date – we call this the 31 March 1982 value.

Example

Jason has made the following purchases and sales of Bluebirdia shares:

• 1 April 2014: bought 1,000 shares for £1 each
• 1 April 2015: bought 500 shares for £1.50 each
• 1 May 2022: sold 500 shares
• 15 May 2022: bought 100 shares for £2 each

For CGT purposes, the 500 shares sold on 1 May 2022 are deemed to be:

• 100 shares bought on 15 May 2022 at a cost of £200
• 400 shares from the pool at an average cost of £1.16 each (£464)

Jason’s total cost for his CGT calculation is £646.

You can find some basic information on calculating gains on shares on GOV.UK.

You can find some detailed information in HMRC’s helpsheet 284 on GOV.UK.

What about cryptoassets?

We discuss cryptoassets separately here.

What is business asset disposal relief (previously called entrepreneurs' relief)?

Business asset disposal relief (called entrepreneurs' relief before 6 April 2020) may apply to you if you dispose of the whole or part of a trading business, or shares in a trading company in which you have a qualifying interest. It can also apply to the disposal of assets which were used in a business after you have ceased trading.

You have to make a specific claim for this relief on a Self Assessment tax return. You must claim the relief in respect of a qualifying business disposal on or before the first anniversary of the 31 January following the tax year in which you made the qualifying business disposal.

We do not explain the relief further here, but you might wish to read HMRC’s helpsheet 275 for more information. You can find this on GOV.UK.

This can be a complicated area so if you think the relief applies to you, you should contact HMRC or a tax adviser for further advice.

What if I sell my personal belongings?

Personal belongings (or ‘chattels’) where the sale proceeds (or value when given away) are less than £6,000 are free from CGT. The asset must be tangible (that is, you can touch it) and moveable – for example, a painting, jewellery (though see below regarding antique watches) or piece of furniture.

My husband and I sold a painting for £10,000. Will that be free of CGT?

Yes, it will because each of you has sold your half share for less than £6,000.

I have just sold a ring for £9,000. Is the whole amount liable to CGT?

CGT is a tax on the profit you have made. If we assume the ring originally cost £2,000, then the gain would be £7,000.

There is a special rule to give some relief here, recognising that if the sales proceeds had been £6,000 no CGT would have been due at all.

Where the sales proceeds exceed £6,000 but the base cost is less than (or equal to) £6,000, the gain is restricted to a maximum of: (Proceeds of sale less £6,000) multiplied by 5/3.

In this case, that means that only £5,000 would be liable to capital gains tax rather than £7,000, that is (£9,000 - £6,000) x 5/3 = £5,000.

If the sales proceeds exceed £6,000 and the base cost also exceeds £6,000, then the normal capital gains tax rules apply.

I have a table and six chairs that we are told will sell together for £12,000. Presumably because each item is worth less than £6,000, the whole amount is tax free?

No, in these circumstances where assets form sets and are sold together, they are treated as one asset for CGT purposes.

If, instead, the assets were sold separately it is possible that they could be treated as separate assets.

Be careful, this does not mean that you could gift the table to a family member and then a couple of chairs, and so on. The law makes it clear that such gifts would form a series of transactions and be linked together with the higher value.

You can read more about the ‘chattel’ rules on GOV.UK.

What if I sell personal belongings with a limited lifespan?

Different rules apply if you sell an asset with a predictable life of not more than 50 years. Such assets, provided they have not been used for business purposes, are exempt from CGT entirely. Examples could include racehorses and computers.

If the asset is qualifies as ‘plant and machinery’ then it will be deemed to have a predictable life of less than 50 years – even if it lasts longer or is already more than 50 years old. For example, antique clocks and watches are considered by HMRC to be ‘machinery’ and are therefore exempt from CGT when sold.