When to sell to use Capital Gains Tax allowances?

stphnstevey

When do most people do this?

Start of tax year?
End of tax year? (In case any other CG needs to be included, like property or something else)

When there are sufficient CG? (Anytime in the year? There has been a recent downturn, markets have bounced back a bit, is now a good time? Or should you wait to see if goes up further?)

Tom99

End of tax year since you do not know what else may crop up and even then only if such a sale was likely to avoid actual tax being paid in a future year.

EdSwippet

End of tax year. Specifically, fewer than 30 days before April 5th. That way, if anything unexpected does appear you can use the 'bed and breakfast' rules to your advantage and effectively unwind part or all of the CGT sale.

ColdIron

I can't speak for 'most people' but I have a growth ISA/GIA pair that will take several years to complete so I do it annually. As I have easily exceeded the dividend allowance elsewhere I sell/repurchase early in the financial year to minimise dividends as they would just be taxed. I have a separate income GIA that won't be troubled by CGT for a while and once the previous project is complete and I start to Bed & ISA this one I will probably continue to sell early in the tax year for the same reason. But that's just me and my circumstances, other people with different circumstances may have a different strategy. There is no one size fits all

Tom99

ColdIron wrote: »

I can't speak for 'most people' but I have a growth ISA/GIA pair that will take several years to complete so I do it annually. As I have easily exceeded the dividend allowance elsewhere I sell/repurchase early in the financial year to minimise dividends as they would just be taxed. I have a separate income GIA that won't be troubled by CGT for a while and once the previous project is complete and I start to Bed & ISA this one I will probably continue to sell early in the tax year for the same reason. But that's just me and my circumstances, other people with different circumstances may have a different strategy. There is no one size fits all

Can you explain why selling early in the tax year minimises dividends? I would have thought selling the day before they go ex-div would do that no matter when in the tax year that was?

ColdIron

This is a Bed & ISA project. If I sold at the end of the financial year I would have accrued all the monthly, quarterly, bi-annual and annual dividends to date and they would be taxed. Selling at the start of the year (and by extension before any of the ex-div dates) means all the dividends would arise within the ISA and not be liable for tax

stphnstevey

EdSwippet wrote: »

End of tax year. Specifically, fewer than 30 days before April 5th. That way, if anything unexpected does appear you can use the 'bed and breakfast' rules to your advantage and effectively unwind part or all of the CGT sale.

Could you elaborate on how that would be done?

talexuser

At the end of the tax year just because I can calculate accurately how much allowance I have left and use all of it. The past few years I've had to use the max allowance each year since global growth has been so healthy.

This year I did some rebalancing putting highest dividend stuff inside the ISA, and more defensive ITs unwrapped, while downsizing the UK. Since this was all done before the September peak I had about 1k5 losses on recently purchased funds but a total crystalised gain of 5k so far. So very soon I will sell all of my F&C for a ~6k gain and buy 20k of something similar like JPMorgan Growth & Income (high dividend) inside the ISA after April. After 30 days I'll probably buy F&C again since this is the second time I've had to sell because of gains since rebuying mid 2017.

I see no point in selling during a downturn at a loss to carry over losses for future gains, since they may not arrive for a long time.

stphnstevey

talexuser wrote: »

At the end of the tax year just because I can calculate accurately how much allowance I have left and use all of it. The past few years I've had to use the max allowance each year since global growth has been so healthy.

This year I did some rebalancing putting highest dividend stuff inside the ISA, and more defensive ITs unwrapped, while downsizing the UK. Since this was all done before the September peak I had about 1k5 losses on recently purchased funds but a total crystalised gain of 5k so far. So very soon I will sell all of my F&C for a ~6k gain and buy 20k of something similar like JPMorgan Growth & Income (high dividend) inside the ISA after April. After 30 days I'll probably buy F&C again since this is the second time I've had to sell because of gains since rebuying mid 2017.

I see no point in selling during a downturn at a loss to carry over losses for future gains, since they may not arrive for a long time.

I may have miss understood, but if your selling from unwrapped to ISA or within the ISA, can you not just buy the same?

talexuser

stphnstevey wrote: »

I may have miss understood, but if your selling from unwrapped to ISA or within the ISA, can you not just buy the same?

Yes correct, just my personal plan is to have the highest dividend payers or greatest chance of growth inside the ISA, and the more defensive funds unwrapped to minimise potential CTG and dividend tax, JPGI has two and a half times the dividend of FCIT so better in the ISA.