Tax 2004/05

Completing the Self-Assessment Tax Return 2004/05


The following notes have been produced to assist employee shareholders to complete their self-assessment Tax Returns for the tax year 2004/05.

If you are in any doubt with regards the completion of the tax form, please consult your financial advisor.

Additional information can be found on the Inland Revenue web site.

There are three areas to consider:
  1. How to specify Foreign Dividends received from your Thales share holding (1998/2000)
  2. How to specify Foreign Dividends received from your Thales share holding (2002)
  3. Profit Sharing Scheme Shares

Additional information can be found on the Inland Revenue web site.

Foreign Dividends - 1998/2000 scheme

In June 2004, you received a gross dividend of €1.12 (which is equivalent to £0.7463) for each Thales share held. French witholding tax equivalent to £0.1119 has already been deducted.

You need to request the foreign pages of the self-assessment tax return (form SA106) by contacting the Inland Revenue orderline on 0845 9000 404 or download from the Inland Revenue web site.

Page F1 of tax form FOREIGN should be filled in as follows:

  1. Column A France
  2. Column B 0.7463*no of shares
  3. Column C Nil
  4. Column D 0.1119*no of shares
  5. Column E 0.7463*no of shares
  6. Last Box Tick
  7. Box 6.2 0.73*no of shares

The exchange rate used was £1 = €1.50069.

Note 1: Irrespective of whether you are intending to reclaim the Avoir Fiscal, the amount an individual is credited with as having paid in all cases is 15%.

Foreign Dividends - 2002 scheme

In January, 2004, Creelia sent details of the 2002 dividend paid in respect of the 2002 offer. This only applies to those shareholders who have Classic units. Please follow the following guidelines.

Page F1 of tax form FOREIGN should be filled in as follows:

  1. Column A France
  2. Column B 0.4986*no of classic shares
  3. Column C NIL
  4. Column D NIL
  5. Column E 0.4986*no of classic shares
  6. Box 6.2 0.4986*no of classic shares

The exchange rate used was £1 = €1.50432.

Profit Sharing Scheme Shares Award

This applies only if any shares awarded to you under the approved profit sharing scheme have been removed from the trust in the tax year 2004/05. If this is the case, the taxable amount and tax deducted under PAYE are specified in the figures at 1.8 and 1.11 of the employment pages.

Capital Gains

If you did not dispose of any shares or other assets during the tax year 2004/04 then there is nothing to complete. Captial Gains is a personal matter and any advice has to be tailored to individual circumstances. An example (from 2003/04 tax year) is available here which may assist in completing the form - any further advice should be obtained from a financial adviser.

Note that resultant gains together with all other capital gains are subject to exemption on the first £8200.

The order of shares sold (known as matching rules) by individuals for CGT purposes is as follows:

The amount of capital gains tax payable on any capital gain may depend on a number of factors including:
  • the availability of your capital gains tax annual exemption (£8,200 for 2004/2005);
  • the availability of taper relief. Taper relief operates to reduce the amount of chargeable gain that is subject to capital gains tax by reference to the length of period of ownership of the shares. Taper relief will be applied based on the number of complete years from the date of purchase until the date of disposal;
  • the interaction of any capital losses you have available;
  • whether you are a higher or basic rate taxpayer.

If you do not sell all the shares you hold or you acquire additional shares within 30 days of the sale, there are complex matching rules to establish which shares are deemed to have been sold for the purpose of determining your chargeable gain. The matching rules mean you cannot choose which shares to sell.

The matching rules operate as follows for sales of shares you hold, assuming all shares were acquired post 5 April 1998:

  • shares sold will first be matched with shares acquired on the same day;
  • shares will then be matched with shares acquired in the 30 days following the date of sale, so you could be deemed to have sold shares you did not own at the date of sale; and
  • finally, shares sold are matched with Shares previously acquired on a “last in first out” basis (i.e. the Shares acquired on a later date are deemed to be sold before shares acquired on an earlier date).

As with all personal tax matters, you should consult with your personal tax adviser, if these rules apply as the rules are complex.

When you dispose of your shares, and your aggregate capital gains for the year are in excess of the annual exemption (£8,200 for 2004/2005) or your sale proceeds are more than four times the annual exemption (&pound32,800 for 2004/2005), any capital gains must be reported on the capital gains pages of the tax return for that tax year.