CGT and the 30 day rule C_Mababejive

#1
Hi all,



just checking i have this right..



I own some shares in Amalgamated Amalgamations in a share dealing account outside of an ISA wrapper.



I sell them up to my annual CGT allowance.



I understand i have to wait 30 days before i repurchase the same share.



Why? surely i have sold, used up my CGT allowance and should therefore be free to buy?



If i sell my shares in AA which are held outside an ISA wrapper and then repurchase them the next day (Bed and ISA) and i correct in that the 30 day rule is not applicable?



Thanks

#2



Hi all,



just checking i have this right..



I own some shares in Amalgamated Amalgamations in a share dealing account outside of an ISA wrapper.



I sell them up to my annual CGT allowance.



I understand i have to wait 30 days before i repurchase the same share.



Why? surely i have sold, used up my CGT allowance and should therefore be free to buy?



If i sell my shares in AA which are held outside an ISA wrapper and then repurchase them the next day (Bed and ISA) and i correct in that the 30 day rule is not applicable?



Thanks
Originally posted by C_Mababejive


The thirty day rule does not apply to Bed and ISA, as the new shares purchased are inside an ISA and therefore exempt from CGT.



Why does the 30 day rule exist? To stop people selling and repurchasing the same shares each year, using their annual CGT allowance to reduce tax on long-term holdings. It was the Inland Revenue's way of bringing in more tax.



See here: https://www.oldmutualwealth.co.uk/Adviser/literature-and-support/knowledge-direct/individual-taxation/capital-gains-tax/30-day-bed-and-breakfast-rules-and-cgt/

#4
First Shares acquired on the same day as the disposal (the ‘same day’ rule).
Second Shares acquired in the 30 days following the day of disposal (the ‘bed and breakfasting’ rule) provided the person making the disposal was resident in the United Kingdom at the time of the acquisition if the relevant acquisition was on or after 22 March 2007.
Third Shares in the Section 104 holding.


https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs-shares-and-capital-gains-tax-2015

#5
If I bought 1000 shares in the year 2000, 1000 shares in the year 2005, 1000 shares in in the year 2010 and 1000 shares yesterday and if I sold 2000 shares today what from a CGT perspective would be the shares I had actually sold?



Edit. Just found out what a section 104 holding is, share price on acquisition for CGT is total acquisition price for all shares divided by number of shares held.

#6



If I bought 1000 shares in the year 2000, 1000 shares in the year 2005, 1000 shares in in the year 2010 and 1000 shares yesterday and if I sold 2000 shares today what from a CGT perspective would be the shares I had actually sold?
Originally posted by TBC15


You would have sold 2000 of your 4000 shares which is half of all your shares. So the relevant costs of those shares are half the costs you spent buying all those shares.



Compare that to the proceeds and see if you made a profit or not.

#8
If you reinvest dividends throughout the tax year and thus increase the number of shares...



eg buy 1000 shares in April at price A, have 4 dividends through the year total 40 extra shares.



Sell 500 shares of 1040 total next March at price B to use up allowance.



Is gain simply 500 x (price A - price B) minus costs?



540 shares left.



Next year you so the same at the end of the tax year. Presumably the 500 sold are calculated from price A.



You now have 80 shares left from 2 years of dividends.



What is the calculation for their starting price, the average from price A to current?

#9
My question is very hypothetical to make the maths simple for me but the basic situation must be possible if I have understood what has been said so far.



In Year 1, I buy 5140 shares at £40.57 each. In year two, I buy 2860 more of the same shares at £52.37 each. The section 104 average cost is £44.79.

In year 3 I sell 2860 shares unfortunately for exactly the price I paid for them (£52.37) and make an apparent capital gain of £21690.17 (2860 *( 52.37-44.79) ) on which I pay tax.

In year 4 I sell the remaining 5140 shares and the stock market has collapsed so I sell them for £40.57 each - the original price I paid for them. Now I make an apparent capital loss of 21690.17 (5140*(40.57-44.79)).



Have I understood the process correctly and done the sums correctly and in year 4, can I go to HMRC and ask for the tax that I paid in Year 3 back - as in fact I have made £0 gain overall.



I believe I can count the loss in year 4 against any gain I made in the same (and subsequent) years but if they were my only shares ever, can I have (effectively) the tax back as cash.

#10



Would a non-resident selling up his holdings before return to UK have to wait 30 days before repurchasing?
Originally posted by TBC15


If he wants the proceeds of that 'selling up' disposal to be matched with the purchase of the shares he previously owned, and not with the purchase of the shares that he is just re-buying, then that would seem to be right.

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