Capital gains tax - 30 day rule

itwasntme001

Hello,

If I sold some shares that were in a taxable account and I bought them back within 30 days, I understand there would be no CGT due.  Does the 30 days include any weekends/public holidays?  Would I need to declare this in a Self Assessment form even though no tax is due?

Thanks!

talexuser

30 days is just that, weekends etc have no effect. You have to declare any sales over 4 times the CGT limit (£49200) even if no tax is due.

ColdIron

As it's not treated as a disposal from a capital gains point of view what are you trying to achieve by selling and repurchasing within 30 days?

bowlhead99

As a technical point it is still a 'disposal' and there is still a gain or loss unless you have repurchased at the exact same price to the penny as what you sold them for. 

It's just that the disposal of the shares is matched to the <30 days later purchase of the shares, rather than the historic old purchase of the shares, for calculating the gain or loss on the sale (assuming you did buy back at least as many as you had sold).

Swipe

I thought it was not bought back within 30 days?

bowlhead99

Swipe said:

I thought it was not bought back within 30 days?

What was not bought back within 30 days? The OP said "If I sold some shares that were in a taxable account and I bought them back within 30 days..." 

If he did that, then the proceeds of sale would be compared against the cost of the [re] purchase within the 30 days which followed the sale, for the purposes of calculating what gain or loss was made on the disposal. 

If more than 30 days elapsed before he bought them again, the proceeds of sale could not be matched with the later purchase, and would instead be matched in the normal way with the cost of the old pool of shares he was selling.

Swipe

OK I misunderstood the OP

TBC15

talexuser said:

30 days is just that, weekends etc have no effect. You have to declare any sales over 4 times the CGT limit (£49200) even if no tax is due.

I think only if you are subject to self assessment. i.e. if you don’t normally do self assessment no need to start now.

talexuser

I'm confused over this point. If you follow the route here
https://www.rossmartin.co.uk/private-client-a-estate-planning/capital-gains-tax/3350-reporting-capital-gains
gains don't exceed exemption, but proceeds are 4 times the limit, not in self assessment, then report using real time or register for self assesment.
The first time I sold more than 4 tmes the limit, but within the allowance with nothing to pay, I told the revenue and they then put me on self assessment from paye.

itwasntme001

bowlhead99 said:

As a technical point it is still a 'disposal' and there is still a gain or loss unless you have repurchased at the exact same price to the penny as what you sold them for. 

It's just that the disposal of the shares is matched to the <30 days later purchase of the shares, rather than the historic old purchase of the shares, for calculating the gain or loss on the sale (assuming you did buy back at least as many as you had sold).

Thanks.  So does that mean (assuming I need to complete a Self Assessment for other reasons) I would need to declare the gain (or loss) arising from this scenario - with the gain (or loss) calculated using the difference between the sale and the subsequent repurchase, providing the repurchase was within 30 days (assuming for simplicity that the total number of shares sold and re-bought are exactly the same)?  And crucially, this would form part of the capital gains tax calculation, whether increasing any potential liability above the threshold (in the case of a gain) or reducing (in the case of a loss)?

If the shares are then sold again and never re-bought or re-bought 30 days after (assuming same number of shares again for simplicity) then the capital gains (or loss) declarable would be the difference between the ORIGINAL purchase cost and the FINAL sale?

bowlhead99

talexuser said:

I'm confused over this point. If you follow the route here
https://www.rossmartin.co.uk/private-client-a-estate-planning/capital-gains-tax/3350-reporting-capital-gains
gains don't exceed exemption, but proceeds are 4 times the limit, not in self assessment, then report using real time or register for self assesment.
The first time I sold more than 4 tmes the limit, but within the allowance with nothing to pay, I told the revenue and they then put me on self assessment from paye.

That is what their 'route' says, and the .gov.uk guidance suggests that you should tell HMRC if you have proceeds over 4x the exemption, but the reality is that if you don't have any CGT to pay and you are not needing to claim any reliefs (e.g. to relieve losses against your gains to get you within your exempt amount) you are not required to tell anyone unless you are required to do a self-assessment in which case you would put that information into the self- assessment.

On it's own, having a high level of proceeds but no actual CGT to pay is not in itself grounds for automatically needing to do a self assessment. However if HMRC fancy asking you to do a self assessment and formally request you to complete one (i.e. they send you a written notice saying you must complete one), you must complete it honestly and following the instructions, which include reference to declaring disposals over 4x the exemption, if you have them.

itwasntme001 said:

bowlhead99 said:

As a technical point it is still a 'disposal' and there is still a gain or loss unless you have repurchased at the exact same price to the penny as what you sold them for. 

It's just that the disposal of the shares is matched to the <30 days later purchase of the shares, rather than the historic old purchase of the shares, for calculating the gain or loss on the sale (assuming you did buy back at least as many as you had sold).

Thanks.  So does that mean (assuming I need to complete a Self Assessment for other reasons) I would need to declare the gain (or loss) arising from this scenario - with the gain (or loss) calculated using the difference between the sale and the subsequent repurchase, providing the repurchase was within 30 days (assuming for simplicity that the total number of shares sold and re-bought are exactly the same)? 

If you are doing a self assessment you should complete it fully including your gains and losses, however:
- if there is no tax to pay because you have a loss and you don't want to 'bank' the loss relief, or
- there is no tax to pay because you have net gains within the annual exempt amount, and you didn't need to claim any loss relief  or other relief to get to that position, and
- the total proceeds aren't 4x the annual allowance where you would be required to tell them about it so they could check the calculations on these high levels of proceeds.
then there is no practical adverse consequence of skipping the capital gains section.

 And crucially, this would form part of the capital gains tax calculation, whether increasing any potential liability above the threshold (in the case of a gain) or reducing (in the case of a loss)?

If you have a disposal it forms part of the CGT calculation just like your other disposals.  All that is happening with a 'within 30 days of disposal' rule is that you are applying different matching rules to say you are matching a sale with the costs of a later purchase, rather than with the costs of an earlier purchase, of the same financial instrument. So if you have a gain when you compare proceeds to costs through that matching process, it will increase your total gains or reduce your net losses.  While if you have a loss it will be available to reduce your other gains or increase the amounts of losses available to carry forward to future years.

If the shares are then sold again and never re-bought or re-bought 30 days after (assuming same number of shares again for simplicity) then the capital gains (or loss) declarable would be the difference between the ORIGINAL purchase cost and the FINAL sale?

Say you buy 100+ shares originally in January.  Then in early July you sell 100 shares, but later in July you buy 100 of those same shares. The early July sale will be set against the late July purchase and the 100+ shares you continue to hold at the end of July are the ones you had acquired in January and have not yet set against any disposal.  Then in August you sell some shares. If there is no further purchase on that same day or within 30 days after that day, the only shares that can be matched to the August sale are ones that you bought in January, because the ones bought in late July have already been set against the proceeds of what you sold in early July.

So as you say, the total gain or loss  per share made on that August  'final' disposal would be the difference between the disposal proceeds per share in August and the allowable acquisition cost per share that you had incurred in January.