HMRC has confirmed it is yet again issuing ‘nudge’ letters to people suspected of potentially not declaring gains on private company share disposals for capital gains taxes.
Reality Check: HMRC Already Knows
If you have disposed on land, property, or private company shares, you may receive the following letter:
Capital Gains Tax on Share Disposals
Companies House holds a register of Persons of Significant Control (PSC). This register shows that you stopped being a person with significant control of [Company x] on [x date].
We’re writing to you because on ceasing control, you may have disposed of some or all of your shares in the company. If you’ve disposed of shares, you may have to pay Capital Gains Tax (CGT) and amend your self-assessment for tax year 2020 to 2021.
Definition of a “disposal”
You make a disposal when you:
Do you have to pay CGT?
You must pay CGT if your total gains from all disposals in a tax year are over the annual exempt amount. For the tax year 2020 to 2021, this was £12,300. Your ‘gain’ is normally the difference between what you paid for the shares and what you sold them for.
What you need to do now
You’ve not included any disposals of shares in your Self Assessment tax return for the tax year 2020 to 2021.
You can get help from HMRC if you need extra support, for example if you need information in a different format or need help filling in forms. Visit GOV.UK and search for ‘Get help from HMRC if you need extra support’. You may want to show this letter to your accountant if you have one.
The following guidance may help you. Go to GOV.UK and search for:
OFFICIAL - Shares and Capital Gains Tax (2020)
What happens next?
When you correct your tax return:
It’s your responsibility to make sure your tax return is completed correctly. If we carry out a compliance check in the future and find that your tax return is not correct, or that you’ve not told us that you need to pay additional tax, we may charge penalties.
Help and advice
If you still have questions after reading the guidance, for example, if you’re not sure how to amend
your tax return or you want to know how to make a payment, you can:
Please note that:
For more information about how to fill in your tax return correctly, go to www.gov.uk/self-assessment-tax-returns/get-help.
For more information on PSC’s visit GOV.UK and search for ‘People with significant control’.