Looking ahead to the new tax year

[Arborbridge]

I think I will wait until the next BLND XD and hopefully we will see a similar drop & recovery!

Or the price might have ratcheted up further so the drop would only bring it back to where it is now

[piccadilly]

I think I will wait until the next BLND XD and hopefully we will see a similar drop & recovery!

Or the price might have ratcheted up further so the drop would only bring it back to where it is now

Thank you. I can see the ex div reasons - however Land Securities,Hammerson and Great Portland are also up.

Does anybody know the reason for this?

[Bouleversee]

Gengulphus said:

"On the actual subject of this thread, what I'm planning to do with the upcoming 2017/2018 ISA allowance is basically some CGT planning to mitigate the effects of some huge capital gains I've realised this tax year (in the non-HYP part of my investments). It involves some full-sale tinkering of holdings that I was very close to tinkering anyway - the CGT savings tip the balance on deciding to actually tinker them - plus some bed-and-ISA/SIPPing using cash already in my ISAs and SIPP from dividends, etc, plus some bed-and-delayed-ISAing, selling this tax year for the CGT effects but subscribing to the ISA and repurchasing next tax year because that's my first chance to subscribe (I subscribed the 2016/2017 ISA allowance almost a year ago). That last does involve risking a day or two of market movements, which is less than ideal compared with the few minutes that an immediate bed-and-ISA risks, but much better than the 31 days required to do it without an ISA..."

Do tell us what companies your big gains were in (even if not relevant to HYP), and did you choose to take the gains or were they takeovers?

[Bouleversee]

I think I will wait until the next BLND XD and hopefully we will see a similar drop & recovery!

Or the price might have ratcheted up further so the drop would only bring it back to where it is now

Thank you. I can see the ex div reasons - however Land Securities,Hammerson and Great Portland are also up.

Does anybody know the reason for this?

I think it may have been this. I seem to remember reading that the others had followed suit after this was announced the other day.

http://www.britishland.com/news-and-vie ... 30-03-2017

[piccadilly]

Thank you.I am currently overweight in property shares - but can't help being tempted by the asset backing.

The yield on BLND is acceptable - but the brokers views on forecast share price are mixed.

[monabri]

Probably the same set of brokers who recommended Cobham, Interserve, and in my case Braemar.

[piccadilly]

Probably the same set of brokers who recommended Cobham, Interserve, and in my case Braemar.

A friend of mine, an experienced investor, recommended Braemar Shipping to me about 2 years ago!

[piccadilly]

On a separate note - BT.A had been downgraded yesterday by Deutsche Bank.

Anybody still buying?

[tjh290633]

Yes, I've added to my holding of BT.A today.

TJH

[monabri]

I already bought in earlier this year after the "Italian Job". I hold at 3.4% by "current" HYP value.

[Gengulphus]

Do tell us what companies your big gains were in (even if not relevant to HYP), and did you choose to take the gains or were they takeovers?

I've already mentioned one of them in other posts - it was ARM Holdings, taken over last September, and as I acquired my shares in roughly the 2007-2010 period, it was a >10-bagger for me. Indeed, during that period its yield did peek above 2.5%, which along with its strong dividend growth might have briefly made it a HYP candidate for those with a taste for those with a taste for forecasting the yield a few years ahead... Not that I'm one of them - it was definitely in a non-HYP part of my strategy, and I didn't even spot that it had arguably been a borderline HYP candidate until some years later!

The others are voluntary top-slicing sales of various smallcap holdings that have grown rather too big. And sorry, but for various reasons I'm not going to say which companies they are - nor I'm afraid even what my reasons are.

Gengulphus

[monabri]

Biggest gains. Taylor Wimpey and Galliford Try.

Offset completely by Interserve and, to a lesser extent, by Braemar Shipping.

Waiting for those lightbulbs to fix themselves!

[Bouleversee]

Do tell us what companies your big gains were in (even if not relevant to HYP), and did you choose to take the gains or were they takeovers?

I've already mentioned one of them in other posts - it was ARM Holdings, taken over last September, and as I acquired my shares in roughly the 2007-2010 period, it was a >10-bagger for me. Indeed, during that period its yield did peek above 2.5%, which along with its strong dividend growth might have briefly made it a HYP candidate for those with a taste for those with a taste for forecasting the yield a few years ahead... Not that I'm one of them - it was definitely in a non-HYP part of my strategy, and I didn't even spot that it had arguably been a borderline HYP candidate until some years later!

The others are voluntary top-slicing sales of various smallcap holdings that have grown rather too big. And sorry, but for various reasons I'm not going to say which companies they are - nor I'm afraid even what my reasons are.

Gengulphus

I also had ARM but I gave them to grandchildren in a bare trust before the takeover so less of a cgt problem for me. I expect the proceeds are sitting in useless cash accounts as I'm not the trustee. I'm not topslicing my overweight holdings as they continue to do better than the ones which have been left behind.

[Gengulphus]

I also had ARM but I gave them to grandchildren in a bare trust before the takeover so less of a cgt problem for me. I expect the proceeds are sitting in useless cash accounts as I'm not the trustee. ...

You do know about the 'market value rule', don't you? I.e. the rule that gifts are treated for CGT purposes as having been made for their market value at the time of the gift - so the giver can't avoid CGT on an asset that has risen in value by giving it away instead of selling it. The recipient does get to use that same value as their acquisition cost, so is only liable for CGT on the gains from the time of the gift until the time they end up selling it (if they end up selling it, that is, but in the case of ARM shares they clearly have).

You do say less of a CGT problem rather than not a CGT problem at all, so hopefully that means you do know about the rule and it's simply less of a problem because you made the gift before the really big rises happened. But it seems worth making certain!

I should add that the market value rule also applies to any transfer of an asset that isn't made by way of an "at arm's length" commercial bargain (so it catches e.g. undervalue sales as well as outright gifts) and any transfer at all to 'connected persons'. With the exception of transfers to one's spouse or civil partner, where it's trumped by the rule that such transfers are treated for CGT purposes as being made at the "no gain / no loss" price - i.e. at the total of the transferor's allowable CGT costs.

... I'm not topslicing my overweight holdings as they continue to do better than the ones which have been left behind.

I try to run my winners as well, and do so more for my smallcap investments than my HYP ones, as smallcap investments do tend to produce a lot of disappointments and need the occasional winner that is allowed to become very big to compensate. Also, I like the combination of taking some calculated risks with remaining financially secure, and in my overall strategy the HYP provides the financial security and the non-HYP investments (chiefly smallcaps, though ARM was an exception!) the calculated risk-taking.

But there does come a point when the combination of just how large a fraction of one's investable wealth is tied up in a holding and just how uncertain the company's future appears multiplies up to too big a risk, and top-slicing is the answer. In the case of the main smallcap holding I top-sliced, its value was similar to that of my ARM holding, each being somewhere of the order of 15% of my total investable wealth, but its performance over the last 10 years or so had been much more of a rollercoaster ride than ARM had been and its future fortunes looked much more dependent on getting individual contracts and so to be highly variable. Had ARM not been taken over, I'd have been willing to run ARM further, but I'd reached my limit on that smallcap - so I've top-sliced it several times, and will do so again if it continues to win. I should also add that due to it being a smallcap and not very liquid, the slices are quite thin - only about 1-2% of my holding each time, and about 1/6th of my holding in total. As a result, I've only realised about 1/6th of my gain on it, compared with all of my gain on ARM - so it's the capital gain on ARM that's the CGT elephant in the room for me, while the capital gains on smallcaps are mere horses in comparison...

Gengulphus

[Bouleversee]

Don't worry, Geng. It was done at the correct MV on the date of the transfer, in the previous tax year not the current one, before I knew about the proposed takeover IIRC, so the gain was within my cgt allowance and the grandchildren benefited most though annoyingly lost what I had hoped would be a good long term investment for them.

I'm just trying to screw myself up to doing the calculations on this year's disposals/takeovers which will be a bit more complicated and I may need help with. Should I be over the top of the allowance, I have some c/f losses to call on.

[YeeWo]

Thus far my 17/18 plan: -

- Top Up BT as the yield looks decent and I think the SP should be £4+ within a reasonable timeframe.
- Buy a small amount of Intercontinental Hotels. It's in no-way Cheap but I very much like the asset-light business model.

My Pot as things stand today: -


Once some ICH is added that will total 20 stocks. I will then endeavour to do the hardest thing of all - NOTHING! Dividend credits will need to be re-invested but hopefully that will be about it........

[tjh290633]

YeeWo, don't get the EPIC wrong, it is IHG for Intercontinental Hotels Group plc.

TJH

[daveh]

My main job for this tax year is to transfer as much of my unsheltered income into my ISA as possible whilst remaining under the CGT limit. Rather complicated by my poor electronic record keeping with respect to CGT and the fact that some shares appear in two unsheltered accounts which makes working out the base cost a little more complicated and the broker base value unreliable. UU. being a case in point. Held in two accounts, one with automatic dividend reinvestment set for the first few years and a complicated history of rights issues, a consolidation with a capital return that could be taken as capital or income. I've had to work the cgt calculation on a worst case basis, so assumed I took the cash as a capital return and reduced the base cost by the relevant amount.

I'm going to do as much of the bed and ISAing at the beginning of the tax year whilst leaving some headroom for any forced takeovers for cash, though a couple of my holding would cause problems as SSE and SMDS (DS Smith) are both showing large gains. RBS would solve the tax problem, but would involve a tax return to claim the losses, which I'd like to avoid. My plans are to transfer in the shares showing the least gain/loss with the highest yield.

[Raptor]

My main job for this tax year is to transfer as much of my unsheltered income into my ISA as possible whilst remaining under the CGT limit. Rather complicated by my poor electronic record keeping with respect to CGT and the fact that some shares appear in two unsheltered accounts which makes working out the base cost a little more complicated and the broker base value unreliable. UU. being a case in point. Held in two accounts, one with automatic dividend reinvestment set for the first few years and a complicated history of rights issues, a consolidation with a capital return that could be taken as capital or income. I've had to work the cgt calculation on a worst case basis, so assumed I took the cash as a capital return and reduced the base cost by the relevant amount.

I'm going to do as much of the bed and ISAing at the beginning of the tax year whilst leaving some headroom for any forced takeovers for cash, though a couple of my holding would cause problems as SSE and SMDS (DS Smith) are both showing large gains. RBS would solve the tax problem, but would involve a tax return to claim the losses, which I'd like to avoid. My plans are to transfer in the shares showing the least gain/loss with the highest yield.

That is what I like about iWeb, they give a "total cost" in their tables. It always tally's with me records so am happy using it.

Raptor.

[Gengulphus]

That is what I like about iWeb, they give a "total cost" in their tables. It always tally's with me records so am happy using it.

Be careful about that, if you mean relying on their "total cost" to be the correct base cost in CGT computations of capital gains and losses. It's something that's dead easy to get right in simple cases, not too difficult in many other cases, and tricky ranging up to impossible in some cases. That last group can be quite small, so the net result is that one can have extensive experience of a broker getting it right and still not be able to rely on them getting it right in all cases.

The way to deal with that is to know the danger signs to look out for that they're liable to have got it wrong. First and foremost is if they don't know about all your non-tax-sheltered holdings of the share concerned. If you own another such holding, either as a certificate or with another broker, they simply cannot track your CGT base cost correctly because they lack information needed to calculate it - and so the only way they can get it right is by sheer fluke. And it's not just present other holdings of the share concerned that are danger signs - past ones can be as well: in particular, if you've dematerialised a share certificate or transferred a holding from another broker into the account, they're reliant on you / the other broker having supplied an accurate CGT base cost.

Another case where they lack required information (or at the very least are reliant on it having been supplied to them) is if anything has happened to the holding in the past that involves a capital distribution eligible for the "small capital distribution" tax treatment. The reason is that you can choose whether to use that treatment or use the standard treatment, and which you use affects both the gain/loss calculated at the time and the CGT base cost of the holding going forward. Examples include 'fractional entitlement' payments from share consolidations, sales proceeds from selling rights during rights issues (provided not too big), 'lapsed rights' payments from rights issues (likewise), and 'dividends' like Rolls-Royce's that are actually issues of redeemable shares that the company then normally redeems. In many cases, the difference between the two treatments is pretty small apart from the 'small capital distribution' treatment being much simpler and easier - but not all cases, and I've had at least one case in the past where a lapsed-rights payment was big enough (for my rather large holding) to make it ineligible for the 'small capital distribution' treatment.

The net result is that it's impossible for brokers to ensure getting their 'total cost' figure exactly right in case involving such capital distributions without asking their clients which tax treatment they've used - something I've never heard of any broker doing - and in a few cases there can be a significant difference. I might still find their figures useful, but I would want to establish which treatment they're assuming and to keep an eye open for cases where I wanted to or had to use the other. (I am only saying "Be careful" about relying on their figures, not "Never use them".)

Past sales that are followed by a repurchase within 30 days are another danger sign, and so are past partial sales done on or before 5 April 2008 (i.e. in the 2007/2008 tax year or before) - the reason being that the broker's figures will only be right for CGT purposes (other than by sheer fluke) if they've got all the share-matching rules right, that those rules were more complex before the 2008/2009 tax year, and that such cases might well be rare enough to be non-existent among the figures you've actually checked...

Those are the main danger signs that I can think of offhand, but more generally I would keep an eye open for anything unusual about a holding's history and if I see such a thing, make certain that I'm confident about the broker's record of getting that particular point right before relying on the broker's figures.

But probably the most important point of this post is that this is an area where people's experiences are going to differ. For instance, I'm quite certain that if iWeb were one of my brokers, I would find their 'total cost' figures near-completely useless for CGT purposes for exactly the same reason that I've found those produced by all of my actual brokers similarly useless. That doesn't contradict your experience that you can rely on their figures - it just means that your circumstances and mine differ... Which means that people reading this thread should be cautious about whether your experience that you can rely on iWeb's 'total cost' figures is relevant to them - and indeed, so should you if your circumstances change in the right ways.

Finally, please don't take the above as an anti-iWeb comment - I would say exactly the same about any other broker, and I don't hold a failure to do the impossible against anyone! If anyone, the people it's really against are the tax legislators who have failed to make capital gains/losses something like dividend income, that can be calculated on a per-account basis by the brokers, with the resulting figures simply being summed by the taxpayer and the final total taxed. And even fixing that would be a mixed blessing: it would save taxpayers who do have to report their capital gains and losses a lot of drudgery, but it would also make it a lot easier politically to bring the CGT allowance down and so collect a lot more CGT...

Gengulphus