4. Investment clubs

You work out your gain differently if you’ve bought and sold shares through an investment club.

An investment club is a group of people that buys and sells shares together on the stock market.

Work out your gain

You’ll get a written statement of your gains and losses (an ‘investment club certificate’) at the end of each tax year from the person who runs the club, eg its treasurer.

When you know your gain, work out if you need to report and pay Capital Gains Tax. There are special rules if you make any losses.

Leaving an investment club

The club buys back your shares if you leave, and you need to include any gain or loss when you’re working out if you need to pay tax.

  1. Take your share of any gains during your membership of the club, and deduct your share of any losses.

  2. Add any income from dividends you received (after tax).

  3. Add any other money you received from the club, and deduct anything you paid into it (eg a monthly amount to invest).

  4. Deduct the total from what you received from the club for your shares.

Contact HM Revenue and Customs (HMRC) or get professional help (eg from an accountant) if you need advice.

Transferring shares into the club

If you transfer shares you already own into the club, you’re treated as selling them and you need to work out your gain.

If you run an investment club

The investment club treasurer or secretary should:

  • divide any income, gains and losses between its members according to the club’s rules
  • give every member a written statement at the end of each tax year - you can use HMRC’s investment club certificate
  • keep records including members’ income and gains
  • arrange to buy shares from members who want to leave the club

If you’re starting a new investment club, make sure it has a constitution and rules. Get legal advice from a professional if you need help.