Are shares for taxpayers basically a cut-price bet?

advanta

I'd appreciate someone more knowledgeable kindly checking my reasoning on this:

So I am fortunate enough to be a higher-rate taxpayer. I am also an amateur investor.

My understanding is:

1.if I make losses when buying and then selling stocks, I can use this loss to offset my income tax.
2. If I make gains when buying and selling stocks then I don't pay capital gains (or any other tax) on any profits from buying and selling stocks, up to 12,300, the threshold for capital gains. 

So it seems like this is a heads-i-win-tails-you-lose scenario which sounds too good to be true. Seems like a monkey could make money in this situation, which is probably about the level of my investment skills.
 
What am I missing here? Thanks in advance for any insight and apologies if I've missed something obvious.

25_Years_On

advanta said:

1.if I make losses when buying and then selling stocks, I can use this loss to offset my income tax.

No they can't. They can be offset against capital gains. And of course you actually have to sell and make the loss real.

Alexland

advanta said:
I am fortunate enough to be a higher-rate taxpayer.

I am fortunate enough to have a job in which I would otherwise be a higher-rate taxpayer however last tax year I managed to make sufficient additional pension contributions and VCT purchases such that I effectively suffered no income tax. My partner works less hours and so was able to do the same with just pension contributions. Then we got enough back from LISA bonuses and child benefit to broadly cover the NI liability.

Aretnap

As above, losses can be offset against capital gains, not against income. If you make a profit on some of your shares but a loss on others you can reduce your capital gains tax bill by choosing your selling times carefully and matching losses to gains. But no matter how much you lose, it hass no effect on your income tax bill.

For most people on relatively normal incomes the ISA allowance, the pension allowance and the CGT personal allowance are more than sufficient to make sure that their CGT bill is zero in any event. So being rich enough to have to worry about matching capital losses to capital gains falls into the category of "nice problem to have".

If you're a higher rate taxpayer by far the best way to use investments to reduce your income tax bill is to invest more within your pension wrapper.