CGT Limit on Investments... pay into SIPP to avoid tax?

hennerz

[Deleted User] wrote:

If the proceeds throughout the year are less than£44400 AND there results in gains less than £11100 you do not even need to declare them.

I would repeat my earlier point that Capital Gains are not pensionable earnings.

For example:

1: You buy and sell 100 funds throughout the year, 50 make a loss, 50 make a profit. The total losers is -£10k, the total of the winers is +£20k, for a profit of £10k overall.

2: You buy and sell 100 funds throughout the year, 50 make a loss, 50 make a profit. The total losers is -£100k, the total of the winers is +£110k, for a profit of £10k overall.

3: You buy and sell 100 funds throughout the year, 50 make a loss, 50 make a profit. The total losers is -£100k, the total of the winers is +£120k, for a profit of £20k overall.

In example 1 there is no need to declare them. What about in example 2 and 3? And if so, do details of all 100 funds need to be presented in the SA return?

[Deleted User]

You have missed my point slightly - if the total PROCEEDS of all disposals made in the year are less than £44400 AND net gains are less than £11000 - no declaration necessary. You appear to be well over the first limit.

For example - sell something for £45000 and make a gain of £100 - still need to be declared.

hennerz

[Deleted User] wrote:

You have missed my point slightly - if the total PROCEEDS of all disposals made in the year are less than £44400 AND net gains are less than £11000 - no declaration necessary. You appear to be well over the first limit.

Thanks for bearing with me, I think I just don't quite understand the wording. HMRC define the terms as:

Sale or disposal proceeds
Proceeds may include:
• cash, payable now or in the future, or anything
that can be turned into cash, unless it’s taxable
as income
• the market value of an asset you were given in
exchange for the asset you disposed of
• the value of a right to receive future payments
where you don’t know the amount of the
payment at the time you sold it
Sometimes you need to use the market value of the
asset instead of the sale or purchase price.

So in the 3 examples to know whether or not one is above the £44k limit what information do we need to know?

Some more examples:

4: Portfolio of 10 funds totalling £20k are switched each month and make £10k profit.

5: Portfolio of 10 funds totalling £100k are switched each month and make £10k profit.

In example 4 the turnover would be roughly 20k sold 12 times = £240k, would this be our "proceeds" value?

In example 5, would doing just 10 switches in Month 1 be £100k proceeds and therefore need to be reported to HMRC despite the profit coming within the £11.1k allowance?

[Deleted User]

Yes to both. If the total proceeds from all of you transactions throughout the whole tax year exceed £44400 - they need to be declared regardless of the gain or loss. 10 x £20k is well in excess of £44400.

jamesd

Also remember that if you have accumulation units outside an ISA you'll need to account for the purchases within the fund in your list of transactions. Better to use income units to avoid this pain.

hennerz

jamesd wrote: »

Also remember that if you have accumulation units outside an ISA you'll need to account for the purchases within the fund in your list of transactions. Better to use income units to avoid this pain.

Thanks, but then you risk extra platform fees when reinvesting the income from the Inc units.

My platform doesn't have any simple document to handle this CGT calculation, they provided a PDF with all swaps ever, but it can't be imported/copied into Excel/Sheets. I guess I need to hire a data entry freelancer to input it all into excel, then it can be handled easily.

jamesd

Yes, you do risk the platform fees, up to you to decide which is most or least painful for you. Since you're changing investments each month I assume that you'd just do the reinvesting along with your normal investment changing if there were costs worth saving.