Why use CGT allowance

flopsy1973

Hi I have approx 30k in GIA made up of shares and some funds with HL. I dont need to realise the money this would give me so why use it. Everywhere seems to tell you to use your cgt allowance but what if you don't need to or think you need to. What do people do if they sell to avoid building up another cgt liability. Can I use the figures for cost price as provided by HL thanks

boingy

Because if you don't use it you lose it and if you hold your investments for many years the CGT hit can be a bit of a shock when you do eventually come to sell. If you have any spare ISA allowance then consider selling from the GIA and reinvesting in an ISA holding the same funds.

wmb194

flopsy1973 said:

Hi I have approx 30k in GIA made up of shares and some funds with HL. I dont need to realise the money this would give me so why use it. Everywhere seems to tell you to use your cgt allowance but what if you don't need to or think you need to. What do people do if they sell to avoid building up another cgt liability. Can I use the figures for cost price as provided by HL thanks

As Boingy writes, use it or lose it but you also need to bear in mind it's under attack: this tax year, 23/24, the CGT allowance is £6,000 but in the next tax year 24/25, so from 06/04/24, it's falling to £3,000. These are down from the far more generous £12,300 in the 22/23 and earlier tax years.

If you haven't used your Isa allowance this tax year I'd consider a 'bed and Isa' to use the allowance. Apart from tax another advantage to using an Isa is that you don't need to worry about record keeping.

Particularly if you've had transfers in, it's never safe to use a broker's figures. You should calculate and keep records yourself. I use MS Money to keep track but you could use a spreadsheet.

https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances#tax-free-allowances-for-capital-gains-tax

GeoffTF

With a £30K investment, the cost of filling your CGT allowance may outweigh any CGT that you eventually save. You need to look closely at the numbers here.

Notepad_Phil

flopsy1973 said:

... Can I use the figures for cost price as provided by HL thanks

Depends on what figures you're looking at.

If they are the summary figures shown when you first login then my answer would be that I wouldn't trust them. You really need to look at the contract notes for every purchase and sale you've made and take account of any stock reorganisations etc to work out the real average cost price of each stock and fund you hold - which could be quite painful if you've not been doing this as you've been going along,

ukbootlegs

If I sell some shares tomorrow (US shares so a trading day rather than holiday as per UK), will I beat the new CGT rules?  Asking coz it may take a few days for the money to hit my account as they are US

wmb194

ukbootlegs said:

If I sell some shares tomorrow (US shares so a trading day rather than holiday as per UK), will I beat the new CGT rules?  Asking coz it may take a few days for the money to hit my account as they are US

Yes. It's the date of the trade that counts for tax purposes, not when the cash arrives in your account.

ukbootlegs

wmb194 said:

ukbootlegs said:

If I sell some shares tomorrow (US shares so a trading day rather than holiday as per UK), will I beat the new CGT rules?  Asking coz it may take a few days for the money to hit my account as they are US

Yes. It's the date of the trade that counts for tax purposes, not when the cash arrives in your account.

Thanks for the clarification. I can see how much I gained on each transaction (SAYE) and vested stock options but it dates back years. And I’ve another SAYE maturing in October. I’m thinking sell £20k worth and out this as cash into an ISA in my wife’s name as I have £20k waiting to put in a S&P isa in my name 

flopsy1973

No haven't been keeping records off there was initial purchase and then some stock reorganisations so with time I have complicated to do. Could I work  out roughly and use some of it have I time to bed and isa ? How will hmrc know if I have gone over limit if I get it wrong and could I add other cash to use my is allowance this year 

jimjames

flopsy1973 said:

No haven't been keeping records off there was initial purchase and then some stock reorganisations so with time I have complicated to do. Could I work  out roughly and use some of it have I time to bed and isa ? How will hmrc know if I have gone over limit if I get it wrong and could I add other cash to use my is allowance this year 

You can only pay cash into your S&S ISA, you can't move shares in so it's perfectly ok to add cash from different sources. Important thing is to make sure you do it by 5th April. If you have cash ISAs already you may find it beneficial to use those for S&S instead so you reduce your CGT liability long term.

Beddie

flopsy1973 said:

No haven't been keeping records off there was initial purchase and then some stock reorganisations so with time I have complicated to do. Could I work  out roughly and use some of it have I time to bed and isa ? How will hmrc know if I have gone over limit if I get it wrong and could I add other cash to use my is allowance this year 

If you can't even work out some rough figures, sell £6000 worth and rebuy in an ISA - impossible to have a gain over the allowance that way!