Some of the clients we work with in the Court of Protection department have a portion of their funds invested in to shares. Usually these assets were obtained when they had mental capacity or maybe they were inherited from a family member or spouse. Most companies will pay out dividends quarterly, meaning that P will receive a payment four times a year. It’s an additional but mostly a minimal form of income.
It is our duty as Deputies to manage P’s finances and affairs which is particularly important when managing shares within the constraints of a particular tax year. Although we are not financial advisors, we can obtain financial advice which we implement on P’s behalf to manage their funds in an effective way.
This could entail selling P’s shares but also taking in to consideration the Capital Gains Tax (CGT) that would be applied on a relevant share sale. CGT is a tax applied by the government which involves taking a portion of the profit one has made off of an asset that has increased in value. The amount of CGT deducted depends on the income earned or gain accrued in a specific period.
CGT is not only applied to shares but also any personal belongings, property that isn’t your primary home, a home if it is rented out or used for business purposes and any business assets. CGT is assessed annually when a self-assessment tax return is completed or through the Capital Gains Tax Service.
Determining whether it is beneficial to P to sell their shares means working out the date on which the shares were acquired and how much they were purchased for. Totalling all the dividends paid out during ownership will help establish if a profit will be earnt through sale. It is important that as Deputies we are aware of any tax that will be deducted from P’s funds as we must be able to justify any transaction we have made to the Official Public Guardian to show that it was done in P’s best interests.