Capital Gains Tax - selling shares

Sunrise_Sunset

Would anyone know how this works?
We are selling shares. Do we pay 33% tax on the total price they sell for? Or is it only paid on any profit that we make from selling them?
We paid about 12k, and now they are worth about 18k.
Any help would be greatly appreciated.

dotsman

Sunrise_Sunset wrote: »

Would anyone know how this works?
We are selling shares. Do we pay 33% tax on the total price they sell for? Or is it only paid on any profit that we make from selling them?
We paid about 12k, and now they are worth about 18k.
Any help would be greatly appreciated.

You pay tax on the profit. The profit is the sale price minus purchasing price & related fees etc. The first 1,270 of profit is tax free. It can get quite complex (how to file, when to file, when to pay etc). So I would suggest doing some reading on revenue.ie to get introduced to the various components & concepts etc.

Wbd1989

33% only on the profit i.e. the 6k. You have a yearly exemption of €1,270 so in the above scenario you would pay 33% tax on 4,730.


Sold - 18,000

Purchase - 12,000

Gain = 6,000

Exemption -1270

Tax payable = 4,730*33% = 1,561

VegetaIRL8e

As far as I remember.
You do not pay tax on the purchase price of the shares. So it is effectively the profit that you are taxed on. In your case 6k
The other thing to note is depending on the % of your shares within the company, if its more than x% (5% I believe) you don't pay 33% and in fact pay a lower 10%

Sunrise_Sunset

Thank you both for clarifying this.
It will really make all the difference to us, as the money is going towards a house deposit and we need every cent.

Sunrise_Sunset

VegetaIRL8e wrote: »

As far as I remember.
You do not pay tax on the purchase price of the shares. So it is effectively the profit that you are taxed on. In your case 6k
The other thing to note is depending on the % of your shares within the company, if its more than x% (5% I believe) you don't pay 33% and in fact pay a lower 10%

Thank you, it's a large company, so I think it will be 33%.

Wbd1989

It's been a while since I studied CGT but as far as I remember the tax isn't due until the 15th of December each year if they are sold between 1 Jan - 30 Nov.

Would just mean you have some time to pay the tax after you sell the shares.

Sunrise_Sunset

Wbd1989 wrote: »

It's been a while since I studied CGT but as far as I remember the tax isn't due until the 15th of December each year if they are sold between 1 Jan - 30 Nov.

Would just mean you have some time to pay the tax after you sell the shares.

That would also be excellent news for us, thank you.

brendan86

Wbd1989 wrote: »

33% only on the profit i.e. the 6k. You have a yearly exemption of €1,270 so in the above scenario you would pay 33% tax on 4,730.


Sold - 18,000

Purchase - 12,000

Gain = 6,000

Exemption -1270

Tax payable = 4,730*33% = 1,561

If you have a yearly exemption of €1,270 would it not be better to only sell a certain a % of shares yearly so you don't pay as much CGT?

Sunrise_Sunset

brendan86 wrote: »

If you have a yearly exemption of €1,270 would it not be better to only sell a certain a % of shares yearly so you don't pay as much CGT?

I didn't realise it was a yearly exemption.
Yes that makes sense alright, but we need every cent this year for a house deposit.

Deckyalrite

brendan86 wrote: »

If you have a yearly exemption of €1,270 would it not be better to only sell a certain a % of shares yearly so you don't pay as much CGT?

I heard a we in there. The exemption applies to each individual so you could be entitled to 2,540 of a personal exemption. Also worth considering whether you previously disposed of any shares at a loss as this loss could be offset again the 6k gain. Also deductible are any commissions on purchase and sale of shares, although small every little helps.

Sunrise_Sunset

Deckyalrite wrote: »

I heard a we in there. The exemption applies to each individual so you could be entitled to 2,540 of a personal exemption. Also worth considering whether you previously disposed of any shares at a loss as this loss could be offset again the 6k gain. Also deductible are any commissions on purchase and sale of shares, although small every little helps.

Interesting. Ok, so the shares were bought in my partner's name and taken directly from his paycheck. My name isn't on them, although we are married.
We previously sold about 6k worth of the shares, although I don't remember the details, I'd have to check with my partner.

Deckyalrite

Sunrise_Sunset wrote: »

Interesting. Ok, so the shares were bought in my partner's name and taken directly from his paycheck. My name isn't on them, although we are married.
We previously sold about 6k worth of the shares, although I don't remember the details, I'd have to check with my partner.

In that case i'm afraid you would only qualify for the €1,270 of an exemption. The deadline is 15th December for the tax payment as mentioned above but the transaction itself would not have to be declared until 31st October 2020.

As long as you pay over the tax before the 31st October 2020 prior to declaring on a CG1 return you should be ok. Revenue might seek a small interest for the late payment but there will no surcharges as long as the return is delivered in time. From my experience it is fairly unlikely they seek interest when the tax liability is under €2.5k.

Calahonda52

Is the company a public quoted company and are the shares unencumbered
if so consider selling enough to get the 1,270 exemption in 2019 and borrow against the rest, giving them as security and then sell next Jan, start of new tax year.
When I did lend against shares such as this, we allowed a 25% cushion so every 1,000 would support 750 of debt.
Just an idea

Da11

Calahonda52 wrote: »

Is the company a public quoted company and are the shares unencumbered
if so consider selling enough to get the 1,270 exemption in 2019 and borrow against the rest, giving them as security and then sell next Jan, start of new tax year.
When I did lend against shares such as this, we allowed a 25% cushion so every 1,000 would support 750 of debt.
Just an idea

Just wonder what's the process of borrowing against your shares? Is it anything to do with a prospect lender wanting to short the shares? And how are you exposed? Thank You