CGT advice please

slinga

Just had an email from Fidelity reminding me about the new limit next month.

I want to do some transfer/sale of UTs and hope somebody might advise me of the right or wrongs. Not if it's a good idea or not.

1. UT held for about 20 years. Bought for £300 now worth £10,000. Want to move it into an ISA of the same UT.

2. UT held for 10 years bought at £20,000 now worth £15000. Want to sell and buy a different UT.

3. UT held for 10 years, bought for £25,000 now worth £33,000 Want to sell and put into a savings thingy with around 4% pa interest.

Assuming no other CGT over the past 10 years if I followed the above course would I be liable to CGT ??

Thanks in advance.

Farway

Yes is short answer

The rules changed last budget, so regardless of how long held the back of envelope calulation is sale price minus bought price less annual allowance of roughly 10k and any selling costs

In your case you have

1 gain of 9,700
2 loss of 5000
3 gain of 8000

roughly gain of 17700 minus loss of 5000
total gain is 12500

CGT is payable on approx 2500

Maybe option would be delay one trade until new tax year?

happyrichard

If the net gain is 12500, you also have an annual exemption to take use of about £10,000. Therefore, you only have chargeable gain of £2500, taxed at 18% across the board now, so that is £450...not bad really!

Hope it helps!

slinga

Thanks both.

But don't I get to spread the gains and losses over the years I have held the UT's.

What happens if the gains happened in the first 9 years and the 10th year there was actually a loss.

Farway

slinga wrote: »

Thanks both.

But don't I get to spread the gains and losses over the years I have held the UT's.

What happens if the gains happened in the first 9 years and the 10th year there was actually a loss.

No, you cannot spread them, the tax applies on sale proceeds and time held, ups & downs are irrelevant

This is one reason for usefulness of ISA, you can forget taxes, but of course there are ongoing costs, but if you hold UTs these are normally in ISA anyway, or are yours not?

If in ISA, then nil tax is due either way

slinga

Farway wrote: »

No, you cannot spread them, the tax applies on sale proceeds and time held, ups & downs are irrelevant

This is one reason for usefulness of ISA, you can forget taxes, but of course there are ongoing costs, but if you hold UTs these are normally in ISA anyway, or are yours not?

If in ISA, then nil tax is due either way

Can you explain the bolded bit in more detail.
Thanks.

These aren't in an ISA.

Also if I was to sell off only part of the £33k UT to reduce my overall CG to zero would I still have to declare all these sales to IR?

Farway

By sale proceeds I meant the total amount you got when sold

Time is no longer relevant since last budget removed the "time held" factor

Not sure if still required to declare if under CGT limit, there is a leaflet somewhere I am sure, or some one else may know answer

happyrichard

The "time held" factor, or tapering of gains in tax parlance, is no longer an issue. All gains are taxed at the point of sale at a flat rate of 18%. It does not matter how long it has been held. I hope that this is clearer.

slinga

happyrichard wrote: »

The "time held" factor, or tapering of gains in tax parlance, is no longer an issue. All gains are taxed at the point of sale at a flat rate of 18%. It does not matter how long it has been held. I hope that this is clearer.

Thanks.

And finally, is there amount below which when cashing in you don't have to inform the Inland Revenue.
I've got in my mind the figure of £33000.?????????

slinga

slinga wrote: »

Thanks.

And finally, is there amount below which when cashing in you don't have to inform the Inland Revenue.
I've got in my mind the figure of £33000.?????????

Just to update a bit.

The amount below which you don't have to inform the IR is £38000.

But you HAVE to inform the IR if you use a negative return when selling an investment to add to a positive return when selling another to keep the total amount below the CGT annual limit.