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Working of the 6 month rule

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
Vulgaris
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Working of the 6 month rule

#139520

Postby Vulgaris » May 17th, 2018, 10:00 am

I appreciate that I can't sell VCT shares and claim tax relief if I participate in a new issue of the same trust within 6 months. I also understand that, if I sell shares in a VCT, HMRC construes me to be selling those I've held for longest.

What, then, if I have 5000 shares in trust X, held for more than 5 years and, this year, participate in its new issue, buying another 5000, wait one day after the new shares are issued, then sell the 'old' 5000?

Clearly I carry investment risk and need more free cash to work this way.

But, is it caught by the 5-year rule or not?

oxmatt
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Re: Working of the 6 month rule

#139525

Postby oxmatt » May 17th, 2018, 10:24 am

I haven't held any for long enough to sell and so have not yet read the rules in any detail yet but I understand it is 6 months before and after the issue of shares (so a 12 month window around the issuance). I'm sure someone with much better knowledge will confirm.

UncleEbenezer
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Re: Working of the 6 month rule

#139536

Postby UncleEbenezer » May 17th, 2018, 11:09 am

Vulgaris wrote:I appreciate that I can't sell VCT shares and claim tax relief if I participate in a new issue of the same trust within 6 months. I also understand that, if I sell shares in a VCT, HMRC construes me to be selling those I've held for longest.

That's for the purpose of the five year rule. Can get 'interesting' where there have been mergers during the five years.
But, is it caught by the 5-year rule or not?

No. That's precisely what the six month rule catches.

This is not tax advice. Just my understanding of the rules.

jtr63
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Re: Working of the 6 month rule

#140746

Postby jtr63 » May 23rd, 2018, 12:21 pm

Can anyone provide a link to how the VCT holding / disposal rules work. I have some funds I have held for longer than 5 years and may be looking at recycling some of the older holdings in to new issues for the tax advantages,

Thanks
John

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Re: Working of the 6 month rule

#140809

Postby naflod » May 23rd, 2018, 4:24 pm

John
Can anyone provide a link to how the VCT holding / disposal rules work. I have some funds I have held for longer than 5 years and may be looking at recycling some of the older holdings in to new issues for the tax advantages,

The document you want to read can be found at:

https://assets.publishing.service.gov.u ... trusts.pdf

It should answer your questions

naflod

Vulgaris
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Re: Working of the 6 month rule

#140817

Postby Vulgaris » May 23rd, 2018, 4:58 pm

Thanks, Naflod. Clearly caught under the clause:

.........the subscription for the relevant shares and the sale of the sold shares are within 6 months of each other (irrespective of which came first)....


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