cwah
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Post by cwah on Apr 4, 2019 1:11:44 GMT
Hello,
It's soon the end of the fiscal year. I have a question regarding capital gain tax.
We get yearly £11.9k capital gain tax from share increase.
I bought some Vanguard S&P500 last year, and made £3k profit.
So in order to take advantage of it, do you sell your shares just 1 day before the end of the year?
Then buy again few days later on the next fiscal year? So I can accumulate capital gain tax?
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IFISAcava
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Post by IFISAcava on Apr 4, 2019 7:27:42 GMT
Hello, It's soon the end of the fiscal year. I have a question regarding capital gain tax. We get yearly £11.9k capital gain tax from share increase. I bought some Vanguard S&P500 last year, and made £3k profit. So in order to take advantage of it, do you sell your shares just 1 day before the end of the year? Then buy again few days later on the next fiscal year? So I can accumulate capital gain tax? you have to sell before the end of tax year yes but you cant rebuy the same fund again for 30 days otherwise you aren't deemed to have sold you can buy a different SP 500 tracker fund straight away though.
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macq
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Post by macq on Apr 4, 2019 7:32:49 GMT
have got nearly all my funds in ISA's over the years so not up on latest CGT but think you would need to wait more then a few days to reinvest (think its was changed to 30 days) with only bed & Isa or bed & spouse being within a day or Two.Also remember until you sell you have not made a gain only a unrealized One and in other years you maybe able to offset a loss as well etc But hopefully someone more up on tax will reply (like IFISAcave who i crossed with)
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james100
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Post by james100 on Apr 4, 2019 7:55:32 GMT
Hello, It's soon the end of the fiscal year. I have a question regarding capital gain tax. We get yearly £11.9k capital gain tax from share increase. I bought some Vanguard S&P500 last year, and made £3k profit. So in order to take advantage of it, do you sell your shares just 1 day before the end of the year? Then buy again few days later on the next fiscal year? So I can accumulate capital gain tax? A few brief notes: 1. 11,700 allowance this tax year 2. Vanguard S&P 500 denominated USD (whether you purchased in GBP or USD) so unless you are selling and buying in USD via USD sub account you'll be paying forex both ends on top of standard commission/transaction fees 3. Assume you made 1 purchase rather than multiple purchases (latter implies s104 holding rules apply) 4. Assume held outside ISA wrapper (else no CGT applicable and you wouldn't be rinsing) 5. Assume you are British domiciled and resident with no additional citizen or residency obligations to double taxation in another jurisdiction 6. Selling and repurchasing within 30 days is deemed as non-crystallization unless you are using Bed-and-ISA process via your broker (possibly too late to initiate this to rinse for this year) irrespective of straddling tax years 7. Date of sale for CGT purposes = date of entering unconditional contract (rather than settlement date, generally T+2) so you can sell on the last day of the tax year assuming the order is executed on that day Q: So in order to take advantage of it, do you sell your shares just 1 day before the end of the year?A: Yes, in theory, if your numbers after considering points 2,3,4,5 above make sense to do so for you (and in financial terms that includes your transaction costs to re-enter the market same size/type securities - although for your CGT calculation only the sale costs applicable) Q: Then buy again few days later on the next fiscal year?... A: Not if you want to have the gain banked considered legitimate by HMRC....you would need to wait + 30 days, or could immediately purchase a similar product with the same/similar underlying security (see exception Bed & Isa point 6. above) Q...So I can accumulate capital gain tax?A: I think you mean bank the allowance....because you're considering this specifically to de-accumulate CGT liability, right? Not a tax expert, answers expressed are merely my opinion and should not be construed as professional advice etc. Hope that helps. Edit: also x-posted with people who can clearly say the same thing as me in far fewer words!
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pom
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Post by pom on Apr 4, 2019 8:03:50 GMT
Whilst I definitely think using your CGT allowance is a good idea, that I think not enough of the forum members use, if that's your only gain and you're not likely to suddenly get loads of others from other sources next year I might question if it's worth doing (every year) for 3k, as I assume there will be some transaction costs, and also potential loss of earnings/gain during the time you're out of the market...and of course extra bits of your tax return to fill in. If you're not expecting to need the whole allowance in one year (I don't know when you invested so have no idea how typical the performance might have been, especially this year!!) then might be worth considering doing every other year or so (or finding ways to generate more gains!) to make the effort more worthwhile.
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cb25
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Post by cb25 on Apr 4, 2019 8:06:11 GMT
Hello, It's soon the end of the fiscal year. I have a question regarding capital gain tax. We get yearly £11.9k capital gain tax from share increase. I bought some Vanguard S&P500 last year, and made £3k profit. So in order to take advantage of it, do you sell your shares just 1 day before the end of the year? Then buy again few days later on the next fiscal year? So I can accumulate capital gain tax? 30 day rule on buy-back is mentioned here
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cwah
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Post by cwah on Apr 4, 2019 8:11:58 GMT
Thanks guys.
The rules is if it's in the same company I have to wait for 30 days.
I'm going to sell and buy somewhere else immediately. 20% tax on £3k is still £600. So whatever is the fee or transaction cost it's not going to mount to that amount!
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macq
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Post by macq on Apr 4, 2019 9:45:47 GMT
Have you checked if the sell will go through in time?
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cb25
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Post by cb25 on Apr 4, 2019 9:52:49 GMT
cwah Just curious - why sell/re-purchase when your profit is so much below the CGT threshold?
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IFISAcava
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Post by IFISAcava on Apr 4, 2019 12:10:18 GMT
cwah Just curious - why sell/re-purchase when your profit is so much below the CGT threshold? If the dealing fees are small and risk of being out of market can be minimised, I am all for taking CGT allowance of this magnitude. It crystallises a tax free gain, rebases the stock for any future gains and allows for other CGT gains in future years. You never know when you might need more than £11.7K in a given year.
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Post by longjohn on Apr 4, 2019 14:28:31 GMT
cwah Just curious - why sell/re-purchase when your profit is so much below the CGT threshold? If the dealing fees are small and risk of being out of market can be minimised, I am all for taking CGT allowance of this magnitude. It crystallises a tax free gain, rebases the stock for any future gains and allows for other CGT gains in future years. You never know when you might need more than £11.7K in a given year.
Sensible idea. When I retired in 2014 I put my lump sum into my trading account. Over the years I've moved the maximum amount into my ISA so my trading account now has little in it. Each year (not necessarily in March/April) I sold my best share and bought something similar to crystallize the gain and reset my tax base. I never had gains anywhere near my full CGT allowance (one can dream!) but it's always nice to make use of what you can.
J
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toffeeboy
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Post by toffeeboy on Apr 4, 2019 14:40:19 GMT
cwah Just curious - why sell/re-purchase when your profit is so much below the CGT threshold? Because you lose it if it isn't used so why not, assuming costs aren't too high it always makes sense.
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IFISAcava
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Post by IFISAcava on Apr 4, 2019 15:18:25 GMT
I've just churned £100K of various predominantly index tracking funds to crystallise £10K of gains Most is in a Cavendish On-line/ Fidelity account with no dealing fees (included within the annual platform fee of 0.25% so no disincentive to move around) Some is in Halifax share dealing account, flat fee of £12.50 per trade (and minimal flat rate annual platform fee of £12.50) None of the funds I invest in have entry/exit fees or bid-offer spread. Total dealing cost was £75 (<0.1%) against a possible tax liability of 20%. Got lucky on the stock market moving the right way during the day or so of dealing delay so actually gained a few hundred overall (though that could have gone the other way of course)!
EDIT: cost was of course 0.75% of crystallised gains vs 20% tax - probably a more valid comparison.
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james100
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Post by james100 on Apr 4, 2019 16:23:29 GMT
I've just churned £100K of various predominantly index tracking funds to crystallise £10K of gains Most is in a Cavendish On-line/ Fidelity account with no dealing fees (included within the annual platform fee of 0.25% so no disincentive to move around) Some is in Halifax share dealing account, flat fee of £12.50 per trade (and minimal flat rate annual platform fee of £12.50) None of the funds I invest in have entry/exit fees or bid-offer spread. Total dealing cost was £75 (<0.1%) against a possible tax liability of 20%. Got lucky on the stock market moving the right way during the day or so of dealing delay so actually gained a few hundred overall (though that could have gone the other way of course)! EDIT: cost was of course 0.75% of crystallised gains vs 20% tax - probably a more valid comparison. Quick question and please feel free to ignore if too personal...assuming you do Self Assessment (as I guess almost every P2P investor does), and assuming that you've crystallized gains under the annual CGT allowance limit, may I ask what info you send to HMRC to comply with the 4 X allowance reportable proceeds rule (i.e. reporting details to HMRC if your transaction proceeds exceed 46,800 this tax year even if the crystallized gain <11,700)? It has been recently brought to my attention that I may, in fact, be one of very few people who ever observe this rule. And frankly, I'd prefer not to bother to whilst gains are less than my allowance...or at least send them less info if I can get away with it.
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IFISAcava
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Post by IFISAcava on Apr 4, 2019 16:28:36 GMT
I've just churned £100K of various predominantly index tracking funds to crystallise £10K of gains Most is in a Cavendish On-line/ Fidelity account with no dealing fees (included within the annual platform fee of 0.25% so no disincentive to move around) Some is in Halifax share dealing account, flat fee of £12.50 per trade (and minimal flat rate annual platform fee of £12.50) None of the funds I invest in have entry/exit fees or bid-offer spread. Total dealing cost was £75 (<0.1%) against a possible tax liability of 20%. Got lucky on the stock market moving the right way during the day or so of dealing delay so actually gained a few hundred overall (though that could have gone the other way of course)! EDIT: cost was of course 0.75% of crystallised gains vs 20% tax - probably a more valid comparison. Quick question and please feel free to ignore if too personal...assuming you do Self Assessment (as I guess almost every P2P investor does), and assuming that you've crystallized gains under the annual CGT allowance limit, may I ask what info you send to HMRC to comply with the 4 X allowance reportable proceeds rule (i.e. reporting details to HMRC if your transaction proceeds exceed 46,800 this tax year even if the crystallized gain <11,700)? It has been recently brought to my attention that I may, in fact, be one of very few people who ever observe this rule. And frankly, I'd prefer not to bother to whilst gains are less than my allowance...or at least send them less info if I can get away with it. I'll ask my accountant what to put and where! Last time I had something like this (it was a property gain) I reported very brief details (from memory total received, amount of Primary residence relief, and that the calculated gain was under the annual limit) it in one of the additional information boxes.
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