sold shares ignorant of CGT. Any way I can avoid?

mubeye

I just sold a bunch of shares in a taxable account, with a gain of about 20k

It was dumb move as I don't need the cash, I just wanted to switch funds. And now I think I will owe tax.

Can I reverse this somehow?

This year I will earn 10k = 30k ltd company dividends a year. Any idea what rate I'll pay?

ColdIron

Can you buy them back? How long ago did you sell?

mubeye

a couple of days ago

ColdIron

If you repurchase some of them within 30 days of sale it may not count as a disposal. Google Capital Gains, Bed and Breakfasting and the 30 day rule

Keep_pedalling

Buy back enough shares to bring you gain down to £11,300. Then flog those on the 6th April to take your full gain tax free.

mubeye

ok will just repurchase the lot I think.

bed and breakfast rules seem more about crossing tax years, and can't find crystal clear statement it is okay for me to do this, but I think my heart is in right place, so better ask forvieness than permission etc

jimjames

mubeye wrote: »

ok will just repurchase the lot I think.

Why do that? If you wait you'll have made £11.3k of gains exempt for the future

ColdIron

If you buy them all back you're just kicking the can down the road. Unless they suffer a very large loss the usual way to avoid CGT is with partial annual disposals. If you did repurchase the lot could you gift half of them to a spouse to use their allowance?

Keep_pedalling

Holding shares in a single company, means that any gains you have made over the years can totally vanish overnight, so repurchasing the lot is probably not the best idea.

You tax bill on that gain is not that high anyway, approx £900 - £1800 depending on your total earning for this financial year, so either pay the tax or do what was originally suggests and split the gain across two financial years.

bowlhead99

mubeye wrote: »

ok will just repurchase the lot I think.

You really don't need to repurchase all of them. It's probably smarter to do the maths at some point soon and decide how many you would have been intending to sell if you had been thinking about staying within the annual exempt amount.

If you don't mind keeping them long term you might want to leave a bit of headroom to sell shares of other companies later this tax year without running out of exemption. But buying *all* of them back seems a bit extreme.


If you buy back, effectively the sale you made two days ago gets matched with the purchase you make in the subsequent 30 days rather than the purchases you made in the distant past which created the big gain. However there may still be some minor gain or loss - for example if you originally bought at 10p, then sold last week at 100p, and buy all of them back at 98p, you still have 2p profit on all the shares, and the next sale in the future (eg at 200p) will use the original 10p cost for CGT purposes. Likewise if you buy back at 103p you have 3p loss on all the shares, but you still have the gain to come in the future and haven't used up any of your exemption.

bed and breakfast rules seem more about crossing tax years

The 30 day rule was put in place to stop people selling shares on the last afternoon of a tax year, and then buying back the exact same quantity and type of shares the next morning in a new tax year... and claiming all the shares they are now sitting on are new shares and they've used their exemption for last year on a "fake" sale-and- rebuy with the pile of shares having a new higher cost so lower future tax bill.

But the logic extends to any sale and repurchase the same day or within 30 days. If it was only a rule to stop people doing it on day 365 of a tax year, people would get around it by doing it on day 250 of a tax year instead. Basically people would get away with fake sales having no commercial purpose other than to dodge tax.

and can't find crystal clear statement it is okay for me to do this, but I think my heart is in right place

It is fine. You are just saying the sale two days ago was a fake sale and the proceeds of x number of shares on that sale should be matched with the purchase cost of x number of shares on the repurchase date a few days later. Rather than having them matched with the first purchase date aeons ago.

mubeye

Great this is all good news.

I have just repurchased 75%. It is kicking the can sure, but it's a long term investment so should be able to trickle it into an isa over next few years.

The fund was a USA all cap tracker, so "relatively" risk free to buy back into (vs bitcoin for eg!) Quite possible it could crash given current high valuations, but it would have to dip a lot by April to match the 2k tax bill (i've already used a lot of my CGT this year...) so i'm choosing to bet it won't dip by that much. Valuations are high, but its not quite dot com, these companies are pumping out real profits. I will sell some more in April.

I've kept a bit of allowance back as I want to dispose of some riskier shares at some point in next couple of months.

Thanks for the help. I should probably get a new accountant!