Is flipping Vanguard Lifestrategy sufficient for 30 day CGT rule?

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  • bowlhead99bowlhead99 Forumite
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    Is this really a problem? you are going to have to make some spectacular gains, to have to pay any tax on selling enough LS40 to raise £20k to put into your ISA. We have been selling a lot more of our assets held in our GIA than than that over the last few years in order make use of our annual allowances.

    VLS40 is up 48.8% since launch, so assuming dividends were not reinvested and all the investment was acquired around six years ago, about £49 of every £149 sales proceeds (or more simplistically £33 of every £100 sales proceeds) may be gain.

    So at you suggest, cashing in only £20k proceeds only creates something like £7k of gains at the moment which is not a problem per se if you don't have other gains.

    However, OP has said he isn't trying to sell £20k annual chunks to top up ISAs or £40k chunks to top up pensions, because he's filling them from other sources. So really is just a general concern about CGT liability building up on an asset that won't need to be exited for "many years".

    If you were an early buyer in VLS40 (with no divs reinvested) you could currently find yourself with gains in excess of a single person's annual exemption even when just selling £35k worth of holdings. If you disposed of £50k there would be about £5k of taxable gains that don't fit in the exemption ; sell £100k to pay off your mortgage and there's over £20k over and above what you get exempted. So, worth trying to nip that in the bud with judicious sales and repurchases using some of the ideas above.
  • jimjamesjimjames Forumite
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    I've not read the full details but if you're flipping between VLS products isn't that a bad idea as you're subject to their dilution levy on each purchase so you'll be hit more than using other funds.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • ColdIronColdIron Forumite
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    I think they dropped the overt dilution levy a while back
  • IanMancIanManc Forumite
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    ColdIron wrote: »
    I think they dropped the overt dilution levy a while back

    Haven't Vanguard now dropped all their entry charges / dilution levies on all their UK funds? They certainly have recently on the UK All Share and the UK Equity Income, and I can't find any others that still have them.
  • IanMancIanManc Forumite
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    bowlhead99 wrote: »


    I guess we agree to differ, :D the rules haven't changed since the previous thread.

    Yes, we can agree to differ. :beer:
  • IanMancIanManc Forumite
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    Apart from anything else though, isn't it just good housekeeping to try to use up the annual CGT allowance? You never know what happens in the future and to have your capital available for liquidation at the minimum cost in CGT is just common sense - I'm sure that rich people all do it!
  • dunstonhdunstonh Forumite
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    if CGT is going to be an issue, then use several multi-asset funds (or build a bespoke portoflio of single sector funds).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • badger09badger09 Forumite
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    ColdIron wrote: »
    I think they dropped the overt dilution levy a while back

    They dropped the dilution levy on the Lifestrategy range in July 2015.
  • jimjamesjimjames Forumite
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    badger09 wrote: »
    They dropped the dilution levy on the Lifestrategy range in July 2015.

    Thanks, I wasn't aware it had changed
    Remember the saying: if it looks too good to be true it almost certainly is.
  • EdSwippetEdSwippet Forumite
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    bowlhead99 wrote: »
    ... So, they made the anti-bed-and-breakfasting rule.
    Well, that's a spirited defence of the apparent thinking behind the 30-day rule. Not to mention a very verbose one.

    The thing is, this 30-day rule doesn't actually achieve any part of its intended purpose. It is so trivially bypassed as to be entirely ineffective. A restriction that restricts nobody might as well not exist. That is why it should be dumped.

    If the government really wanted to stop people using an annual CGT allowance then they could have done something more effective to make that happen. They did not.
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