Minimizing Capital Gains Tax on shares

switch76

Is it correct that the annual tax free allowance can't be carried over to the next year?

If you are a non-tax payer for income tax, do you still pay CGT when selling shares?

What do you do to minimise the amount you pay in Capital Gains Tax on shares? Do you sell your shares every year if you make a profit or does that incur lots of transaction fees and stamp duty?

talexuser

not sell every year, bed and breakfast is when you sell in any one year if your profit has reached the current limit of £10600, i.e. the DIFFERENCE in price between when you bought and sell realising the gain. Then you can sell on one day and buy back the next day to start the profit clock back at zero for a new batch of tax free gains on that share or investment.

I believe cgt is entirely independant of income tax but there must be experts here who know much more than me.

switch76

talexuser wrote: »

not sell every year, bed and breakfast is when you sell in any one year if your profit has reached the current limit of £10600, i.e. the DIFFERENCE in price between when you bought and sell realising the gain. Then you can sell on one day and buy back the next day to start the profit clock back at zero for a new batch of tax free gains on that share or investment.

Is that still allowed? I thought they brought in a new rule to stop people doing that.

talexuser

yes, you're right, they tightened up and I think you now need to wait a month before repurchasing the same shares - on the assumption market movement may increase the risk of losses. But again I'm no expert.

Aegis

talexuser wrote: »

I believe cgt is entirely independant of income tax but there must be experts here who know much more than me.

It used to be. Now your CGT is added to your taxable income, anything that lies within the basic rate band or below is then charged at 18%, anything in the higher rate or above is charged at 28%.

soulsaver

Aegis wrote: »

It used to be. Now your CGT is added to your taxable income, anything that lies within the basic rate band or below is then charged at 18%, anything in the higher rate or above is charged at 28%.

Sounds good but I'm afraid it's completely wrong.
Op should try posting in the tax forum for more accurate responses.

Lokolo

soulsaver wrote: »

Sounds good but I'm afraid it's completely wrong.
Op should try posting in the tax forum for more accurate responses.

Instead of saying "it's completely wrong, go elsewhere". Why don't you just say how it's wrong here and now?

http://www.hmrc.gov.uk/rates/cgt.htm

For gains on or before 22 June 2010, Capital Gains Tax is charged at a flat rate of 18 per cent.
The following Capital Gains Tax rates apply to gains after this date:
18 per cent and 28 per cent tax rates for individuals (the tax rate you use depends on the total amount of your taxable income, so you need to work this out first )

For gains on or after 23 June 2010, individuals need to work out their total taxable income before working out which Capital Gains Tax rate to use.
First work out your taxable income by deducting any tax-free allowances and reliefs that you are entitled to.
Next see how much of your basic rate band is already being used against your taxable income. The maximum basic rate band for 2010-11 is £37,400.
Allocate any remaining basic rate band first against gains that qualify for Entrepreneurs' Relief - these are charged at 10 per cent.
Next allocate any remaining basic rate band against your other gains, these are charged at 18 per cent.
Any remaining gains above the basic rate band are charged at 28 per cent.

Plus examples on the page.

So I don't believe Aegis is "completely" wrong.

soulsaver

Lokolo wrote: »

Instead of saying "it's completely wrong, go elsewhere". Why don't you just say how it's wrong here and now?

http://www.hmrc.gov.uk/rates/cgt.htm





Plus examples on the page.

So I don't believe Aegis is "completely" wrong.

It's better advice than saying you add your capital gains tax to your income... which I know is COMPLETELY wrong. If you are not sure at least say 'I think'.
But thanks for your input on how I should post.

Aegis

soulsaver wrote: »

Sounds good but I'm afraid it's completely wrong.
Op should try posting in the tax forum for more accurate responses.

Interesting response, but seems a little incorrect yourself.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4016313

Pretty clearly spells out what I just said. I didn't go into full details of the annual exemption or the reliefs available, but it absolutely IS the case that chargeable gains are added to taxable income to work out the rate of CGT payable on those gains. Which is all I was really trying to point out.

What in particular did you feel was "completely wrong"?

Aegis

soulsaver wrote: »

It's better advice than saying you add your capital gains tax to your income... which I know is COMPLETELY wrong. If you are not sure at least say 'I think'.
But thanks for your input on how I should post.

Wow, now that I've spotted your edit it's clear that you called me "completely wrong" because of a typo!

Seriously, benefit of the doubt would have been nice, a correction would also have worked, but the accusation you instead chose to run with: very harsh.

switch76

Anyone got any tips or strategies for reducing the amount of capital gains tax you pay?