How do we pay minimum Tax (Capital Gains) on Vanguard funds-30 day rule?

NottinghamMan

How can we legally pay the minimum if any at all, Capital Gains Tax on Unit Trusts, shares, Vanguard funds?
I have Vanguard Life Strategy UCITS they are called, index funds I think.
I don't understand the Capital Gains tax on these shares.
Forget pensions and ISA's to utilise allowances, I have them.
What is this 30 day rule?
If have £300,000 worth of 60/40 funds, and it goes up to £400,000, and I sell £100,000 or £400,000, do I get capital gains tax charges on the £100,000 minus my personal allowance?
If I sell just the personal allowance £12,300 and buy that back or the EXACT units I sold, at 31 days, am I exempt from Capital Gains Tax?
Do I have to sell the £100,000 gain and buy that back?
Or do I have to sell the whole £400,000 and buy that back or the exact amount of units back if risen or dropped in value?
I read u can sell the funds, then immediately buy something equivalent like Target retirement funds (so u not out the market too long), then sell them after 30 days and buy the Life Strategy funds back.
Or is it I must buy the same shares back within 30 days? As that seems easy, to sell £400,000 one minute and buy the same £400,000 back 10 mins later?
I have a wife and can use her to pass stuff to as I read I can sell the whole lot or the gain (No one making it clear to me) and she buys the equivalent £400,000 same day, then she then gives to me and now my new value is reset to £400,000 for future Capital Gains Tax?

Keep_pedalling

You are taxed on you actual gain so if, as in your example, you sold a quarter of your shares for £100k you would be realising a gain of £25k so assuming you have no other gains in the financial year just £12,700 of that gain would be liable to tax. 

No you can’t simply buy a different asset to avoid the tax, but you could avoid almost all of that liability by splitting the sale across two tax years. 

oldbikebloke

you have misunderstood the "bed & breakfast" rules - ie the 30 day limit or "share identification"
CG13370 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

a transfer to your wife is a disposal and is on a "no gain, no loss" basis. You are deemed to have sold at market value (not what she may or may not pay you in reality) and she is deemed to have purchased at same market value. Therefore she acquires your holding at your original cost and will pay CGT on a gain calculated from that original amount - in other words it achieves nothing as it was an obvious tax ploy closed long ago 
Capital Gains Tax: Gifts to your spouse or charity - GOV.UK (www.gov.uk)

NottinghamMan

Keep_pedalling said:

You are taxed on you actual gain so if, as in your example, you sold a quarter of your shares for £100k you would be realising a gain of £25k so assuming you have no other gains in the financial year just £12,700 of that gain would be liable to tax. 

No you can’t simply buy a different asset to avoid the tax, but you could avoid almost all of that liability by splitting the sale across two tax years. 

Thanks for your reply,
So because I'm only selling 1/4 of the 400k, ie. 100k, even though I've made 100k, I'm only taxed on a 1/4 of the 100K ie. 25k? That seems a bit good.

NottinghamMan

NottinghamMan said:

Keep_pedalling said:

You are taxed on you actual gain so if, as in your example, you sold a quarter of your shares for £100k you would be realising a gain of £25k so assuming you have no other gains in the financial year just £12,700 of that gain would be liable to tax. 

No you can’t simply buy a different asset to avoid the tax, but you could avoid almost all of that liability by splitting the sale across two tax years. 

Thanks for your reply,
So because I'm only selling 1/4 of the 400k, ie. 100k, even though I've made 100k, I'm only taxed on a 1/4 of the 100K ie. 25k? That seems a bit good.

Thanks for your reply.
U telling me I misunderstood, I still keep seeing this 30 day thing with no clear explanation for the normal Laymen ie. me.
So we can't sell at 400k & then buy another 400k (same units) in 32 days &then it's like I have a new purchase at 400k then? And cause I've re-bought, HMRC says Ooh u good boy, we letting u off that original sale 32 days ago.
Is that codswallop then?

pjread

if you buy 100k units for £300k (£3/unit), then the price rises to 400k (£4/unit), your gain is £1 *per unit if you sell*

So if you sell all of them, your gain is £100k.  If you sell 10k of them, your gain is £10k.  Until you sell them, there is no gain. 

The 30 day thing is to prevent people momentarily selling to 'reset' the price gains are calculated for.  It doesn't directly "let you off" anything.

Does that make more sense?

Jeremy535897

pjread said:

if you buy 100k units for £300k (£3/unit), then the price rises to 400k (£4/unit), your gain is £1 *per unit if you sell*

So if you sell all of them, your gain is £100k.  If you sell 10k of them, your gain is £10k.  Until you sell them, there is no gain. 

The 30 day thing is to prevent people momentarily selling to 'reset' the price gains are calculated for.  It doesn't directly "let you off" anything.

Does that make more sense?

It was called "bed and breakfasting". You realised a gain equal to your annual exemption, and then bought an equivalent amount to maintain your holding. For example, you sold shares that cost £20,000 for £32,300, and then bought the same holding a week later for £32,500. There used to be no tax to pay. You spent £200 to save capital gains tax on £12,500 of gain in the future. Nowadays the £32,500 purchase is matched with the £32,300 disposal, giving a £200 loss, and your base cost of your holding is still £20,000.

pjread

Jeremy535897 said:

pjread said:

if you buy 100k units for £300k (£3/unit), then the price rises to 400k (£4/unit), your gain is £1 *per unit if you sell*

So if you sell all of them, your gain is £100k.  If you sell 10k of them, your gain is £10k.  Until you sell them, there is no gain. 

The 30 day thing is to prevent people momentarily selling to 'reset' the price gains are calculated for.  It doesn't directly "let you off" anything.

Does that make more sense?

It was called "bed and breakfasting". You realised a gain equal to your annual exemption, and then bought an equivalent amount to maintain your holding. For example, you sold shares that cost £20,000 for £32,300, and then bought the same holding a week later for £32,500. There used to be no tax to pay. You spent £200 to save capital gains tax on £12,500 of gain in the future. Nowadays the £32,500 purchase is matched with the £32,300 disposal, giving a £200 loss, and your base cost of your holding is still £20,000.

Unless you buy something else (e.g. sell LS100 and buy similar value of VWRL), but OP seemed confused enough without adding that in.  Similar to recirculating funds from VCT disposals into different but similar VCT's each tax year... 

NottinghamMan

Does anyone know how I get email notifications from this site to tell me I have replies?

Thanks pj & Jeremy, u explaining way more than any Google search.
Some questions I had prepared below which I think yours already answers, but if u know anything else, please tell me.
Yes pj that makes sense thanks.
And pj, yes your last post ha ha is I believe one of my questions below.
And u right, I am ruddy confused when it comes to Tax & allowances & transfers etc.

Bed and ISA
If put monies ie. 20k x 2 into normal Vanguard funds, then before April, put the 20k x 2 into ISA's for me & wife, will that help lowers the tax bill in years to come when sell the funds? As the 20k x 2 may have took some of the gains away?
As I've read funds into ISA's don't pay CGT.

Is this the same with Bed & SIPP? So any gain in 1 year ie. £30k is wiped out cause u put in your ISA & SIPP at the end of the year?
So for example if I drip feed 32k x 2 for me & wife & 20k x 2 total £104k into normal fund, then transfer that into SIP (+Tax relief) & ISA, any gain ie. 6k in fund doesn't count in years to come?
So if I'm putting 100k into normal funds every year & drip feeding into SIPP's & ISA's now to the maximum allowances, do I want to drip feed EVERYTHING into normal funds, then just transfer at end of year to the SIPP's & ISA's. And the 100k left in the normal fund, if it gained 6k, that is then wiped out?
And your ongoing fund set to £0 as such?
Basically, what I'm asking is, I don't want big Capital Gains bill in the future from let's say £1,000,000 I've paid into funds, now worth 1.5 million, sell 200k in 1 year and taxman says ooh u owe us the tax on that 200k please. If the above scenarios can avoid this.

What about bed your spouse where you sell & wife buys the same from the fund?
It won't let me post a proper link

Jeremy535897

I find it hard to follow your questions, but:

• if you are asking whether a contribution to a SIPP can reduce capital gains, the answer is no. It reduces income. Shares held in a SIPP are exempt from capital gains tax though
• payments into a ISA don't reduce income or capital gains, but sales of shares in an ISA are exempt from capital gains tax
• if you sell a particular share to make a gain equal to your annual exemption, your wife can buy the same company's shares at any time, and that transaction is not matched with your sale

NottinghamMan

Thanks Jeremy,

I don't blame u for finding hard to follow my questions, I jot these notes down so I don't forget, however they don't come across in the best format for a question.
I read transferring normal funds into the SIPP say March 2022, would then get rid of any Capital Gains u had in that fund, BUT ONLY if u were putting it into a SIPP or ISA. Is that bulls__t?

pj said this:
Unless you buy something else (e.g. sell LS100 and buy similar value of VWRL), but OP seemed confused enough without adding that in.  Similar to recirculating funds from VCT disposals into different but similar VCT's each tax year...

Which I interpret as selling my say 400k or 350k etc. Which has a Capital Gain of 100k or 50k, but if buy funds straight away, does this wipe out Capital Gains & then reset the new base cost to 400k or 350k?

Or if I sold the £12,300 allowance each year, for 5 years, would that wipe out £62.500 of Capital Gains in year 6 if I sold again? Or if the new value is say £450k in another 5 years, what effect would it be by my selling £12,500 every year?
And would I be allowed to re-buy funds straight away?

Apologies for keep asking, but I knew on this site, someone out there would know something.