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CGT for foreign stock

I'm doing my SA calculations for the 04-05 tax year.

I sold some US stock which I'd held for a few years. The stock has lost about 10% in value, but the drop in the dollar has had a much more severe effect. The exchange rates were about 0.7 UKP/dollar when I bought the stock and had dropped to about 0.55 UKP/dollar when I sold it.

Am I correct that the CGT owing should be calculated by: (money from sale * exchange rate on date of sale) - (purchase cost * exchange rate on date of purchase)?

Or should I just take the difference in US $ between the proceeds and cost and multiply that by the US/UK exchange rate on the date of the sale?

If I do the first method then I end up with a CGT loss of over 40K UKP!

Assuming this is the correct method of making this calculation, are the Revenue likely to accept this without question? Since my account was with a US broker, I don't have any copies of the contract notes. Worse, all my statements were sent electronically, and I rather doubt the Revenue would accept anything I simply printed out myself. I suppose I could get copies of my statements if needed, but since I have closed the account (and no longer have any funds in the US to pay them for sending me duplicate statements), this seems likely to be a painful process.

Any thoughts would be appreciated.

Reply to
Anonymous via the Cypherpunks Tonga Remailer
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You have a big loss, which is only of use if you have any gains which you can offset against it. Presumably you have some notes about what you bought, when and for how much? I don't suppose that your situation is unusual.

Reply to
Terry Harper

Unfortunately I only have about 1K of gains in that year, so well under the CGT allowance.

Oh yes, I have my own records, and I did make copies of all the statement webpages before I closed my US share account. I was wondering whether the Revenue would think I was 'trying it on' to build up a large capital loss I could offset future gains against, and would want proof beyond my own records, or editable files from my computer.

Hopefully the Revenue are used to seeing people who have been bitten by the US/UK currency slide. I have to admit I hadn't realised how bad it was. Until yesterday, I was under the impression that I'd only made a modest loss that year!

Reply to
Anonymous via the Cypherpunks Tonga Remailer

"Anonymous via the Cypherpunks Tonga Remailer" wrote in message news: snipped-for-privacy@mail.cypherpunks.to...

Method 1 is the correct one - see the cases of Bentley v. Pike and Capcount Trading v. Evans.

A CGT Loss is not an allowable Loss until so claimed within the Time Limit.

There is no need to provide any documentation, unless requested by HMRC.

Reply to
Doug Ramage

You can carry the loss forward to future years.

Reply to
Peter Saxton

Ah. So if I understand you correctly, you're saying that HMRC will just note that I've had a loss for that tax year, and it's only when I try to offset a gain against it in future years (that is, claim it as an allowable Loss) that they may want proof of the original loss?

Google tells me that the Time Limit is five years and 10 months. I would not be at all surprised if I fail to exceed the CGT allowance in each of those years, so perhaps there's no problem at all.

Thanks all for your help

Reply to
Anonymous via the Cypherpunks Tonga Remailer

"Anonymous via the Cypherpunks Tonga Remailer" wrote in message news: snipped-for-privacy@mail.cypherpunks.to...

Yes, the time limit is 5yrs 10 months.

Once claimed, the Losses carry forward (without a time limit) until utilised.

I have never been asked for any CGT paperwork.

Reply to
Doug Ramage

I'm not sure you understand. Just claim the loss now and utilise it when you need to, even it it's in 20 years time.

Reply to
Peter Saxton

Oh, I see. The time limit applies to when you claim that losses exist, not to when you can offset gains against them. Thanks.

Reply to
Anonymous via the Cypherpunks Tonga Remailer

Sometimes you can engineer capital gains, especially by swapping income for capital gains. In this way you may be able to utilise these losses. But make sure the net effect is to your benefit!

Reply to
Peter Saxton

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