Capital Gains, end of year confusion

Poddyt

Hello,

I've currently invested in a few shares around November which have managed a rather good return.

I am still currently under the capital gains tax (which stands at 10,000ish).

but my concern is what happens before and after the finiancal year (april). Seeing if I make a profit of 8,000 can I withdraw this (tax free) and then reinvest allowing me to take full advantage of the 10,000 tax free limit for the next finiancal year?

I've read something about "Bed and Breadfast" but got a little confused.

Thanks in advanced for the help!

Richie(UK)

Hi,

You can still B&B but it is more restricted than it was a few years ago. In order to avoid the re-aquisition being matched with the sale you need to do it more than 30 days later. HMRC guidance : http://www.hmrc.gov.uk/manuals/CGmanual/CG50566.htm

To avoid the 30 days matching you could sell the shares in one company and buy different shares. Or, if you wish to retain the same company shares and you have a partner, you could sell the shares and your partner re-acquire them (and you do the same for them for a different company), eg you sell Tesco and partner buys Tesco, partner sells Barclays and you buy Barclays.

antrobus

Poddyt wrote: »

...

I've read something about "Bed and Breadfast" but got a little confused.

The phrase 'Bed and Breakfast' was used to describe the practice whereby an investor would sell their shares one day to crystalise a capital gain, and then buy them back in the afternoon or the next day in order to establish a higher base cost for CGT.

Hasn't really worked since they introduced the 30 day rule back in the late 90s; if you buy and sell the same shares within 30 days, HMRC will ignore the transactions and tax you on the basis that they never happened.

CLAPTON

if you haven't already used your S&S ISA allocance you can buy some back in the ISA

Mikeyorks

Unless you buy back within an ISA - which effectively neutralises the 30 day rule (bed & ISA). But you're clearly restrained by the annual ISA allowance.

Poddyt

Ok so going on what you guys have indicated, as long as I don't buy any of the same shares within a 30 day period after selling them that should allow me to take advantage and maximize capital gains before tax.

For an example, selling RBS shares on the 15th May and rebuying them again on the 20th April would get around the 30 day policy? Or is it 30 days from the start of the financial year. Thanks for your help!

Richie(UK)

Poddyt wrote: »

Ok so going on what you guys have indicated, as long as I don't buy any of the same shares within a 30 day period after selling them that should allow me to take advantage and maximize capital gains before tax.

For an example, selling RBS shares on the 15th May and rebuying them again on the 20th April would get around the 30 day policy? Or is it 30 days from the start of the financial year. Thanks for your help!

Hi,

I take it that should say 15th March?

It is 30 days between the transactions.

Poddyt

Haha yes my mistake.

Thanks for all your help!

Poddyt

Sorry one last example, what if I sold RBS shares but within the 30 day period I brought a different share but after the financial year, would this still allow me to get the max out of the tax free capital gains?

Thanks again in advance!

roger_c

If you keep your gain/profit for CGT under the annual exemption and don't do the B&B as mentioned above (for example buy and sell RBS shares within 30 days) you will be fine.

Mikeyorks

Poddyt wrote: »

Sorry one last example, what if I sold RBS shares but within the 30 day period I brought a different share but after the financial year,

The financial year is only a consideration as that is the span of the £10600 CGT allowance. If you want to sell RBS and buy other shares - you can do that the same day if you wish.