Investment gamble

Almost_Redundant

Hi all,
I am currently invested in aa AIM listed share that has so far done well and netted me a 200% profit which equates to roughly 14K. I have held this share for over 5 years now and believe it has a long way to go. I wont mention its name to avoid being accused of ramping.

My first question is this, as its an AIM listed share held for over 2 years, am I entitled to taper relief on the capital gain i've made or did that go out of the window in April and i'll be stung for a flat 18%?

Secondly, as I believe this share will rise further I desparately want to invest more into it. Would it be wise to put another 14K in (equal to my current profit). If it rises, I win. If it drops, i'm only losing the profit i've effectivley made?

Thanks

debbie42

Almost_Redundant wrote: »

My first question is this, as its an AIM listed share held for over 2 years, am I entitled to taper relief on the capital gain i've made or did that go out of the window in April and i'll be stung for a flat 18%?

Secondly, as I believe this share will rise further I desparately want to invest more into it. Would it be wise to put another 14K in (equal to my current profit). If it rises, I win. If it drops, i'm only losing the profit i've effectivley made?

Thanks

I'm puzzled. What are you planning on doing with the shares? Selling them (all or part) or buying more?

Almost_Redundant

Yes I will eventually sell them hence my Tax question. However I feel there is further profit to be made with it hence my investing strategy question. Hope that clears it up.
Thanks.

debbie42

I haven't done it myself, so have no personal knowledge of this, but my understanding is that the taper relief has now gone, and it's a flat rate of 18%, even for AIM shares.

Have you used your ISA allowance yet? That's one way you could try and mitigate any tax liabilities. I'd be loathe to save it all up then potentially have a stonking tax bill after x years.
(edit: oops, sorry, I forgot, they are AIM shares, and you can't normally have those in an ISA!)

Are you using each year's CGT allowance?

Almost_Redundant

Never been in the position to have to pay CGT yet. But reckon I will take advantage of it hopefully next March.

dunstonh

Taper relief has gone and its a flat 18% now. However, you do have your personal allowance so you could stagger a sale/switch over two years.

purch

Investment gamble

:eek:


Shurely you must mean 'Carefully Considered Investment Decision'

debbie42

Almost_Redundant wrote: »

Would it be wise to put another 14K in (equal to my current profit). If it rises, I win. If it drops, i'm only losing the profit i've effectivley made?

I'm not sure about the logic of this. If you don't sell, then your profit is already locked into the shares. So any extra you invest is additional to your current profit, yes? You are effectively increasing your exposure. The 14K profit connection seems a bit spurious to me in terms of new shares. Unless I'm missing something?

nicko33

if you put 7k in and made 14k profit (200%), the current value is 21k
if you then put another 14k in, you have put in 21k and the total value is 35k

if the share price halves the value will be 17.5k, a net loss of 3.5k (21-17.5)

if the price drops you will make a "paper" loss on the original 14k profit
plus, a more "real" loss on the extra 14k capital invested

depends on how far the price drops as to whether the losses are 14k or more, or less.

Almost_Redundant

Yes definately an all or nothing gamble this one. My theory is to match the profit i've made already through new investment (without selling, i.e add new funds) in the hope that the share will continue to rise. if it falls I can stomach a 14K loss (as thats the profit i've made so far) before bailing out.

Guess its down to how much risk I can take. This really will be an all or nothing punt. If the companies plans come to fruition its a multi bagger which will be life changing. If they dont then all is lost. Feelings amongst other investors (far more knowledgable than me on the subject seem to think so).

Everything crossed!!

cheerfulcat

Almost_Redundant wrote: »

Would it be wise to put another 14K in (equal to my current profit). If it rises, I win. If it drops, i'm only losing the profit i've effectivley made?

No - you're losing the profit and some or all of the new investment, depending on the size of the drop. This is not to say that it's a bad idea to add to an investment which is doing well, but your reasoning is wonky!