selling/buying and the CGT 30-day rule

sarahTT

I am still trying to get to grips with that 30-day rule (for CGT purposes) when selling and buying some holdings. Let's say I have two funds with very similar characteristics (say two ETFs shadowing the same underlying), one from provider A and the other from provider B. I hold 1000 units of A and 1000 units B and one unit of A is about the same price as one B (to keep things simple). So, after a few years there's some gain on both funds and I would like to sell them (to realise the gains within the CGT exemption) and buy them again afterwards. I can wait 30 days between selling and buying and all is fine but then I am not invested for those 30 days.
Can I also do the following without getting into taxman trouble: I sell my 1000 As and, same day, buy 1000 Bs. I have gains on A but below the exemption. Then I wait 30+ days and sell my 2000 Bs. I now have also gains on B but the total of A+B sales is still below (or around) the exemption. Same day, I buy 2000 As and wait 30+ days. Then I sell 1000 As and buy 1000 Bs and so I am back where I started. Is that OK or will the taxman come and hit me with his rhythm stick?
(I am not saying that I would actually do that... it would much depend on whether circumstances are really conducive to this sort of game and the sums involved are worth it... not to talk about the taxman. OTOH it's an idea that may open a way to utilise part or all of the CGT exemption -- that is, if it's legit and the circumstances are right.)

Jeremy535897

If you own two extremely similar investments A and B, is there another extremely similar one, say C? Sell A and B, buy C, wait 31 days, sell C and buy A and B, if you really want to.

sarahTT

Yes, that's a similar idea though finding two v similar investments is easier than finding three. However, my main question was about whether the taxman will interpret such sequences of sales/buys as a sort of tax evasion or perhaps at the very limit of avoidance? If so, I might end up on the wrong side of things :-(

Jeremy535897

So long as they aren't all arranged in advance, I doubt HMRC could take a point regarding tax avoidance.

sarahTT

Thanks Jeremy. What do you mean when you say "all arranged in advance"?

And further it's been my understanding that avoidance is basically legal but evasion is not... and there's probably a grey zone between the two. That's what I mean with wrong side of things...

Jeremy535897

If you are committed into entering into all the transactions when you do the first one.

There are many different stages: doing nothing, claiming allowances you are entitled to, tax planning, tax avoidance, tax avoidance using a scheme, and tax evasion. Evasion is illegal, avoidance using schemes can be very expensive if they go wrong, or are not properly disclosed, avoidance (what I outline above) can get you charged interest, and potentially penalties depending on the disclosure.

sarahTT

> committed into entering into all the transactions

I see... but how can anyone ever prove such a commitment existed when I did the first one? At any rate I'll steer clear for the time being...

Jeremy535897

sarahTT said:

> committed into entering into all the transactions

I see... but how can anyone ever prove such a commitment existed when I did the first one? At any rate I'll steer clear for the time being...

There will be an electronic or paper trail if you set up everything in advance. I don't know if it would even be possible. If you have your plan in advance but just do the transactions as you planned independently of each other, there will be no issue.

sarahTT

Yep, that's what I meant. Thanks for clarification.