CGT crystallisation

RTD2020

I wish to crystallise an investment gain before the end of the tax year, but wish to stay invested in the market. I understand that as long as I don't purchase exactly the same investment then the gain is crystallised, so if I sold VWRP and at the same time purchased VWRL would my gain be crystallised, or would they be classed as the same asset?

ColdIron

There is some dispute over the validity of this, particularly with Acc/Inc OEICs, I'm in the 'it's OK' camp. Different security, different price etc. I think the situation is clearer with VWRP/VWRL but I don't think there could be any dispute with VWRP to VHVG which tracks the developed world index. It won't make any real difference over a short period

RTD2020

ColdIron said:

There is some dispute over the validity of this, particularly with Acc/Inc OEICs, I'm in the 'it's OK' camp. Different security, different price etc. I think the situation is clearer with VWRP/VWRL but I don't think there could be any dispute with VWRP to VHVG which tracks the developed world index. It won't make any real difference over a short period

Thanks for the reply, I may as well go for VHVG. It will be for a short period, as I shall be selling shortly after to transfer into my ISA.

Joey2013

Why don't you sell your VWRP say on the 5th of April and then buy the same in your ISA on the  6th of April.

RTD2020

Joey2013 said:

Why don't you sell your VWRP say on the 5th of April and then buy the same in your ISA on the  6th of April.

I did think of that, but the amount I need to sell would be more than my ISA allowance.

masonic

If you place a market order to sell VWRP and separately place another market order to buy VWRL, then you will have disposed of your original shares for CGT purposes. Whereas a switch or conversion, where the provider directly exchanges shares/units without a cash consideration that would be considered a reorganisation or capital rather than a disposal. This distinction is why there is uncertainty around this issue.

If you are going to Bed & ISA, then it would make sense to do this with part of the proceeds, rather than trade in and out of the other ETF unnecessarily. You could sell sufficient VWRP shares to use your CGT allowance on say 4th April to allow for settlement, set aside £20k, and then you'd only need to reinvest the remainder outside the ISA before could Bed & ISA'ing the £20k on Monday 8th April to reinvest that day.

RTD2020

masonic said:

If you place a market order to sell VWRP and separately place another market order to buy VWRL, then you will have disposed of your original shares for CGT purposes. Whereas a switch or conversion, where the provider directly exchanges shares/units without a cash consideration that would be considered a reorganisation or capital rather than a disposal. This distinction is why there is uncertainty around this issue.

If you are going to Bed & ISA, then it would make sense to do this with part of the proceeds, rather than trade in and out of the other ETF unnecessarily. You could sell sufficient VWRP shares to use your CGT allowance on say 4th April to allow for settlement, set aside £20k, and then you'd only need to reinvest the remainder outside the ISA before could Bed & ISA'ing the £20k on Monday 8th April to reinvest that day.

Thanks for giving your understanding of the VWRP/VWRL issue, I had thought it would be a disposal and not a re-organisation.

That sounds a sensible schedule, and my plan did have one more transaction. I just need to set myself a calendar reminder so that I don't forget, which was one of the reasons for doing it earlier!