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Using annual CGT allowance GIA Accounts

Pat38493
Posts: 3,412 Forumite


Am I correct in thinking that I am not allowed to sell a fund and then buy the exact same fund immediately to realise my CGT allowance, but I can sell the fund and buy a different one that tracks the exact same index?
Also - if I bought a fund on several different dates at different prices, how to I calculate the capital gain? Am I supposed to track the units on a FIFO basis or can I average it or what?
Also - if I bought a fund on several different dates at different prices, how to I calculate the capital gain? Am I supposed to track the units on a FIFO basis or can I average it or what?
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Pat38493 said:Am I correct in thinking that I am not allowed to sell a fund and then buy the exact same fund immediately to realise my CGT allowance, but I can sell the fund and buy a different one that tracks the exact same index?YesYou are allowed to sell and buy back the same fund anytime you like but if it's within 30 days it's not deemed to be a disposal. If you buy a different fund then the sale is a disposalAlso - if I bought a fund on several different dates at different prices, how to I calculate the capital gain? Am I supposed to track the units on a FIFO basis or can I average it or what?All your purchases are pooled together in what's called a section 104 holding. You need to calculate the weighted average cost per share/unit. Add up the total costs of the purchases (including trx fees and stamp duty if applicable) and divide by the number of shares/units. Then when you sell x number of shares you know the cost of the shares sold and deduct it from the sale proceeds. That's your gainIt's easy if you keep a rolling total in Excel from day one but much less fun if you don't. Remember that sales to not change your cost of acquisition so you can reuse the average cost until you buy againIf they are open ended funds you will need to deduct retained dividends from the gain if it's an Acc fund (which will reduce your gain) or deduct any equalisations from your book cost if Inc (which will increase your gain)3
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ColdIron said:Pat38493 said:Am I correct in thinking that I am not allowed to sell a fund and then buy the exact same fund immediately to realise my CGT allowance, but I can sell the fund and buy a different one that tracks the exact same index?YesYou are allowed to sell and buy back the same fund anytime you like but if it's within 30 days it's not deemed to be a disposal. If you buy a different fund then the sale is a disposalAlso - if I bought a fund on several different dates at different prices, how to I calculate the capital gain? Am I supposed to track the units on a FIFO basis or can I average it or what?All your purchases are pooled together in what's called a section 104 holding. You need to calculate the weighted average cost per share/unit. Add up the total costs of the purchases (including trx fees and stamp duty if applicable) and divide by the number of shares/units. Then when you sell x number of shares you know the cost of the shares sold and deduct it from the sale proceeds. That's your gainIt's easy if you keep a rolling total in Excel from day one but much less fun if you don't. Remember that sales to not change your cost of acquisition so you can reuse the average cost until you buy againIf they are open ended funds you will need to deduct retained dividends from the gain if it's an Acc fund (which will reduce your gain) or deduct any equalisations from your book cost if Inc (which will increase your gain)
So for example if I am using a GIA provider and I bought 10000 units for £10000, with a £5 SIPP provider transaction fee , my aquisition cost is £10005.
If I then by 5000 more units for £5250 plus £5 transaction fee, I now have 15000 units with a aquisition cost £15260 so my weighted unit cost is £1.01733 per unit (do I round to nearest penny)?
And this is the case even though the transaction fee is not part of the fund value - it is deducted from my account separately?
The price now rises to £1.50 so the investment is worth £22500 in my provider portal.
I sold 6000 units for £9000, with a selling transaction fee £5. The cost at the weighted cost is 6104 so my gain is £2891. I assume that's what you mean?
(I am ignoring dividends in the example)0 -
Pat38493 said:Also - if I bought a fund on several different dates at different prices, how to I calculate the capital gain? Am I supposed to track the units on a FIFO basis or can I average it or what?
Edit to add: Your use of "SIPP provider" and the fact that you've posted a CGT question in the pensions forum looks odd. If you're doing this all inside your SIPP, you don't have any CGT problems. The fact that your GIA may also be held at your SIPP provider is irrelevant. A GIA is a GIA whether or not you also have a SIPP with that same provider or platform (at a guess, IWeb?). Maybe you already know this, but it seems worth mentioning.2 -
EdSwippet said:Pat38493 said:Also - if I bought a fund on several different dates at different prices, how to I calculate the capital gain? Am I supposed to track the units on a FIFO basis or can I average it or what?
Edit to add: Your use of "SIPP provider" and the fact that you've posted a CGT question in the pensions forum looks odd. If you're doing this all inside your SIPP, you don't have any CGT problems. The fact that your GIA may also be held at your SIPP provider is irrelevant. A GIA is a GIA whether or not you also have a SIPP with that same provider or platform (at a guess, IWeb?). Maybe you already know this, but it seems worth mentioning.1 -
Pat38493 said:So for example if I am using a GIA provider and I bought 10000 units for £10000, with a £5 SIPP provider transaction fee , my aquisition cost is £10005.
If I then by 5000 more units for £5250 plus £5 transaction fee, I now have 15000 units with a aquisition cost £15260 so my weighted unit cost is £1.01733 per unit (do I round to nearest penny)?
And this is the case even though the transaction fee is not part of the fund value - it is deducted from my account separately?Yes. Your pool cost is what you paid to acquire it, including any trading costs (but interestingly, not including any recurring platform fee.) If you plan on handling things this way however, do not round. That will introduce inaccuracies.
Using per-unit costs is a way to look at things and can make your own calculations easier, but if you look at the HMRC's "official" way of tracking costs, as shown in the example I linked upthread, you'll see that they consistently use total pool costs rather than per-unit costs. Rounding per-unit costs is a bad idea. Imagine how off your numbers would become if you had a large holding of a so-called "penny stock" with a per-unit cost of £0.014999.The price now rises to £1.50 so the investment is worth £22500 in my provider portal.
I sold 6000 units for £9000, with a selling transaction fee £5. The cost at the weighted cost is 6104 so my gain is £2891. I assume that's what you mean?
Another way of viewing this is simply that you sold 6000/15000 of a pool that cost you £15260, and 6/15 times £15260 is £6104. No per-share or other six-decimal-places calculations needed. The cost basis of the bit of the pool you didn't sell and which remains is (15000-6000)/15000 of £15260, so £9156 (which is, not coincidentally, £15260 less £6104).
If you work through HMRC's example linked upthread but using your own numbers, you should get this result.2
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