Shares question
Discussion
Apparently,after you sell a certain share, you can't buy back in to that share at its current price for a month. If you do buy back in (ie- a day after you sold) the price will be assumed to be the one at which you first bought them at, for CGT reasons.
For example:
Feb 8th 2010 you buy 10,000 'joe bloggs pharmaceuticals' shares @ 10p a share.
Feb 10th 2010 you sell them at 12p a share, making a 200 pounds profit.
Then the next morning (11th) you decide want to buy back in. The price is 12.5p a share, but if you buy back in, the prices will be assumed to be 10p a share. Is that right?
If that is orrect, how do people get round this if they rally want to buy back? Do they just do it anyway and take the hit as they want to be back in to make more money, and work on the fact its virtually 10p? I only ask as I want to stay under the 10 grand profit limit before paying any CGT for this tax year.
Hope that all makes sense....
Cheers
Cad
For example:
Feb 8th 2010 you buy 10,000 'joe bloggs pharmaceuticals' shares @ 10p a share.
Feb 10th 2010 you sell them at 12p a share, making a 200 pounds profit.
Then the next morning (11th) you decide want to buy back in. The price is 12.5p a share, but if you buy back in, the prices will be assumed to be 10p a share. Is that right?
If that is orrect, how do people get round this if they rally want to buy back? Do they just do it anyway and take the hit as they want to be back in to make more money, and work on the fact its virtually 10p? I only ask as I want to stay under the 10 grand profit limit before paying any CGT for this tax year.
Hope that all makes sense....
Cheers
Cad
something like that but, as usual with tax, the devil is in the detail
http://www.hmrc.gov.uk/cgt/shares/find-cost.htm
http://www.hmrc.gov.uk/manuals/cgmanual/CG50566.ht...
http://www.hmrc.gov.uk/cgt/shares/find-cost.htm
http://www.hmrc.gov.uk/manuals/cgmanual/CG50566.ht...
Sell the physical, buy back as a spread bet. Hold bet for 30 days, close and buy back the physical.
Sell the physical, buy back physical within an ISA.
Sell the physical, buy a call option for 30 days.
Sell the physical, buy back the physical in a Ltd company.
I suspect that buying back in a wife's name may not work as you are able to combine allowances etc. It used to though.
Sell the physical, buy back physical within an ISA.
Sell the physical, buy a call option for 30 days.
Sell the physical, buy back the physical in a Ltd company.
I suspect that buying back in a wife's name may not work as you are able to combine allowances etc. It used to though.
THis is a response from another forum, but it sounds different from the 'set in stone' rules I have understood:
"The point is that you need to be exposed to 'market risk' when you sell your shares and then buy them back. HMRC don't want people who are sitting on big gains just selling to realise their capital gain of £10100 (tax free allowance) and then buying the same shares back a couple of minutes later at the same price (having only had to incur the selling and dealing fees and stamp duty).
So the point they are saying is, if you sell to crystallise a capital gain, you need to wait at least 30 days before buying shares back in the same stock for that capital gain to be recognised under the CGT allowance. If you sell to crystallise a gain (or loss for that matter) and then buy back within 30 days, you have not been subject to 'market risk' and therefore the proceeds would be viewed as income and taxed accordingly and not capital gain (and therefore taxed after the allownace at a lower rate).
That is my understanding. So the risk is, you sell to use up your tax-free CGTY allowance, and wait 30 days, the price shoots up in that period. You need to weigh up which is more lmportant from a risk / reward perspective."
Another response:
"Honestly, do you worry that you pay for example £5000 CGT and make another £10000 for yourself or sit there and watch the £10000 go buy? I can never understand that...its the same as cutting loose poor performing shares, even at a loss to make money elsewhere."
Which I kind of agree with. God I hate the tax laws in this country
"The point is that you need to be exposed to 'market risk' when you sell your shares and then buy them back. HMRC don't want people who are sitting on big gains just selling to realise their capital gain of £10100 (tax free allowance) and then buying the same shares back a couple of minutes later at the same price (having only had to incur the selling and dealing fees and stamp duty).
So the point they are saying is, if you sell to crystallise a capital gain, you need to wait at least 30 days before buying shares back in the same stock for that capital gain to be recognised under the CGT allowance. If you sell to crystallise a gain (or loss for that matter) and then buy back within 30 days, you have not been subject to 'market risk' and therefore the proceeds would be viewed as income and taxed accordingly and not capital gain (and therefore taxed after the allownace at a lower rate).
That is my understanding. So the risk is, you sell to use up your tax-free CGTY allowance, and wait 30 days, the price shoots up in that period. You need to weigh up which is more lmportant from a risk / reward perspective."
Another response:
"Honestly, do you worry that you pay for example £5000 CGT and make another £10000 for yourself or sit there and watch the £10000 go buy? I can never understand that...its the same as cutting loose poor performing shares, even at a loss to make money elsewhere."
Which I kind of agree with. God I hate the tax laws in this country
caduceus said:
THis is a response from another forum, but it sounds different from the 'set in stone' rules I have understood:
"The point is that you need to be exposed to 'market risk' when you sell your shares and then buy them back. HMRC don't want people who are sitting on big gains just selling to realise their capital gain of £10100 (tax free allowance) and then buying the same shares back a couple of minutes later at the same price (having only had to incur the selling and dealing fees and stamp duty).
So the point they are saying is, if you sell to crystallise a capital gain, you need to wait at least 30 days before buying shares back in the same stock for that capital gain to be recognised under the CGT allowance. If you sell to crystallise a gain (or loss for that matter) and then buy back within 30 days, you have not been subject to 'market risk' and therefore the proceeds would be viewed as income and taxed accordingly and not capital gain (and therefore taxed after the allownace at a lower rate).
That is my understanding. So the risk is, you sell to use up your tax-free CGTY allowance, and wait 30 days, the price shoots up in that period. You need to weigh up which is more lmportant from a risk / reward perspective."
Another response:
"Honestly, do you worry that you pay for example £5000 CGT and make another £10000 for yourself or sit there and watch the £10000 go buy? I can never understand that...its the same as cutting loose poor performing shares, even at a loss to make money elsewhere."
Which I kind of agree with. God I hate the tax laws in this country
First response seems spot on. Second one is an idiot."The point is that you need to be exposed to 'market risk' when you sell your shares and then buy them back. HMRC don't want people who are sitting on big gains just selling to realise their capital gain of £10100 (tax free allowance) and then buying the same shares back a couple of minutes later at the same price (having only had to incur the selling and dealing fees and stamp duty).
So the point they are saying is, if you sell to crystallise a capital gain, you need to wait at least 30 days before buying shares back in the same stock for that capital gain to be recognised under the CGT allowance. If you sell to crystallise a gain (or loss for that matter) and then buy back within 30 days, you have not been subject to 'market risk' and therefore the proceeds would be viewed as income and taxed accordingly and not capital gain (and therefore taxed after the allownace at a lower rate).
That is my understanding. So the risk is, you sell to use up your tax-free CGTY allowance, and wait 30 days, the price shoots up in that period. You need to weigh up which is more lmportant from a risk / reward perspective."
Another response:
"Honestly, do you worry that you pay for example £5000 CGT and make another £10000 for yourself or sit there and watch the £10000 go buy? I can never understand that...its the same as cutting loose poor performing shares, even at a loss to make money elsewhere."
Which I kind of agree with. God I hate the tax laws in this country
The 30 day rule was to stop bead and breakfasting, which was the act of selling on April 5th at 16.29 to use up CGT allowance then re-opening the position at 08.01 on the morning of the 6th and in the new tax year.
But, as listed above, there are numerous ways to not get caught out. It boils down to the cost of transactions, local taxes (stamp) and market spread as to whether it is worth doing.
DonkeyApple said:
caduceus said:
THis is a response from another forum, but it sounds different from the 'set in stone' rules I have understood:
"The point is that you need to be exposed to 'market risk' when you sell your shares and then buy them back. HMRC don't want people who are sitting on big gains just selling to realise their capital gain of £10100 (tax free allowance) and then buying the same shares back a couple of minutes later at the same price (having only had to incur the selling and dealing fees and stamp duty).
So the point they are saying is, if you sell to crystallise a capital gain, you need to wait at least 30 days before buying shares back in the same stock for that capital gain to be recognised under the CGT allowance. If you sell to crystallise a gain (or loss for that matter) and then buy back within 30 days, you have not been subject to 'market risk' and therefore the proceeds would be viewed as income and taxed accordingly and not capital gain (and therefore taxed after the allownace at a lower rate).
That is my understanding. So the risk is, you sell to use up your tax-free CGTY allowance, and wait 30 days, the price shoots up in that period. You need to weigh up which is more lmportant from a risk / reward perspective."
Another response:
"Honestly, do you worry that you pay for example £5000 CGT and make another £10000 for yourself or sit there and watch the £10000 go buy? I can never understand that...its the same as cutting loose poor performing shares, even at a loss to make money elsewhere."
Which I kind of agree with. God I hate the tax laws in this country
First response seems spot on. Second one is an idiot."The point is that you need to be exposed to 'market risk' when you sell your shares and then buy them back. HMRC don't want people who are sitting on big gains just selling to realise their capital gain of £10100 (tax free allowance) and then buying the same shares back a couple of minutes later at the same price (having only had to incur the selling and dealing fees and stamp duty).
So the point they are saying is, if you sell to crystallise a capital gain, you need to wait at least 30 days before buying shares back in the same stock for that capital gain to be recognised under the CGT allowance. If you sell to crystallise a gain (or loss for that matter) and then buy back within 30 days, you have not been subject to 'market risk' and therefore the proceeds would be viewed as income and taxed accordingly and not capital gain (and therefore taxed after the allownace at a lower rate).
That is my understanding. So the risk is, you sell to use up your tax-free CGTY allowance, and wait 30 days, the price shoots up in that period. You need to weigh up which is more lmportant from a risk / reward perspective."
Another response:
"Honestly, do you worry that you pay for example £5000 CGT and make another £10000 for yourself or sit there and watch the £10000 go buy? I can never understand that...its the same as cutting loose poor performing shares, even at a loss to make money elsewhere."
Which I kind of agree with. God I hate the tax laws in this country
The 30 day rule was to stop bead and breakfasting, which was the act of selling on April 5th at 16.29 to use up CGT allowance then re-opening the position at 08.01 on the morning of the 6th and in the new tax year.
But, as listed above, there are numerous ways to not get caught out. It boils down to the cost of transactions, local taxes (stamp) and market spread as to whether it is worth doing.
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