When to sell to use CGT allowances?

[Cookie]

When do most people do this?

Start of tax year?
End of tax year? (In case any other CG needs to be included, like property or something else)

When there are sufficient CG? (Anytime in the year? There has been a recent downturn, markets have bounced back a bit, is now a good time? Or should you wait to see if goes up further?)

[gryffron]

Most planned sales I make as late in the tax year a possible.

That's because sometimes there are events beyond your control (takeovers etc) which can crystallise a gain when you don't want one. And also because my main need for cash from my taxable holdings is to transfer it to next years isa.

Gryff

[JonE]

In case any other CG needs to be included, like property

Worth noting that the dates of acquisition and of disposal of property are typically the date of exchange (when contracts are signed) and not, as many assume, the date of completion. If exchange and completion straddle the tax year-end then getting this wrong can wreck one's planning.

Less frequently encountered are exchanges which don't specifically fix the date of completion but state that it's conditional on some event taking place (such as, perhaps,a grant of planning consent) and in such cases the date to be used for CGT purposes is the date when the condition is satisfied.

Cheers!

[Cookie]

Most planned sales I make as late in the tax year a possible.

That's because sometimes there are events beyond your control (takeovers etc) which can crystallise a gain when you don't want one. And also because my main need for cash from my taxable holdings is to transfer it to next years isa.

Gryff

Out of interest, if you need the cash for next years ISA and also need to sell in this tax year to use the CGT allowances, I presume there is a period of time between selling and buying?

Or do you sell 5th April and buy 6th April somehow?

Not having done it before, I am trying to work out how I will do it

[mutantpoodle]

Gryff[/quote]

Out of interest, if you need the cash for next years ISA and also need to sell in this tax year to use the CGT allowances, I presume there is a period of time between selling and buying?

that would depend on whether your ISA was with same house as shares you sell..if so not much time would be required ASK !
if different houses then obviously you would have to allow time to realise the asset and transfer funds to new house

[gryffron]

Out of interest, if you need the cash for next years ISA and also need to sell in this tax year to use the CGT allowances, I presume there is a period of time between selling and buying?
Or do you sell 5th April and buy 6th April somehow?

In my case, I am not necessarily buying the same asset class as I am selling. I normally take this opportunity to rebalance. And often the ISA is with a different broker to the non-ISA. So transfer timing isn't that critical. I guess if you wanted to retain the same asset classes timing would be more critical, as you wouldn't want to be out of the market for too long.

I generally sell in the last week of March, to allow all the funds to clear. Any outstanding corporate activity should have been announced weeks before. Transfer the cash to the ISA very soon after April 6th, and then buy.

(Just realised that spans brexit day this year Might make my decisions a bit harder if things haven't been nailed down by then.)

Gryff

[yorkshirelad1]

When do most people do this?

Start of tax year?
End of tax year? (In case any other CG needs to be included, like property or something else)

When there are sufficient CG? (Anytime in the year? There has been a recent downturn, markets have bounced back a bit, is now a good time? Or should you wait to see if goes up further?)

I usually think about it in Feb/Mar (which this year is complicated by Brexit). I don't use up the annual allowance (assuming it hasn't been used up already) unless there's a good investment reason to do so. Remember that if you are going to reinvest back into the same asset (and not putting the proceeds into another investment or putting the proceeds into an ISA) you should wait 30 days or it's a matched bargain for CGT purposes.

[kempiejon]

I've made 3 disposals already taking profits but also selling to avoid a takeover and reduce my dividend income, I still have a bit of room in the allowance that I'll crystallise in the last week of March and if a random take over and profit comes along I have a couple of losses I could realise.

[Alaric]

Or do you sell 5th April and buy 6th April somehow?

You cannot quite do that unless you have one day settlement. But typically if you sell on the 3rd, you get the proceeds on the 6th. If both your taxed and ISA accounts are with the same Broker, it's just an internal transfer. The same applies if you are financing a SIPP with the £ 2880 net contribution which is allowed regardless of whether you have any earnings from employment.

One marginal hazard is that if you sell an OEIC, you don't know the price, so have to guess whether you've kept within the CGT allowances.

[BobbyD]

Or do you sell 5th April and buy 6th April somehow?

Not having done it before, I am trying to work out how I will do it

One advantage of not doing everything last minute might be that you have enough cash to bridge the gap for a number of smaller purchases done in sequence but don't have £20k lying around idle.

Since I whittled down big single holdings with gains which would have been problematic had they been crystallised without consent I'm a lot more laid back about timing. I'll still leave myself some breathing room and polish at the end of the year, and if there hasn't been a compelling reason to ISA during the year it may be that everything still happens then.

This year has been mainly about moving shares which do annoying things to my tax return in to my ISA.

[Lootman]

When do most people do this? Start of tax year? End of tax year?

I don't like to be out of the market for the duration between selling and buying. So whilst I see the logic of waiting until the end of the tax year, I do my selling at the beginning of the tax year.

I do not rely on the sales proceeds to fund the new year's ISA either, so this way I can sell and buy on the same day, regardless of whether I am re-purchasing the same security or not.

There are some benefits to selling on April 6th. You shelter that year's dividends from income tax. And a same-day "bed and ISA" does not have any market risk.

Also, some brokers offer a "bed and ISA deal" where you save on commissions if you sell a security from your taxable account and are using the proceeds to re-purchase it in your ISA.

[BobbyD]

Also, some brokers offer a "bed and ISA deal" where you save on commissions if you sell a security from your taxable account and are using the proceeds to re-purchase it in your ISA.

I prefer to take the £10 hit and do it myself with two trading windows open on my screens.

Used B&ISA once, and this may be unrepresentative but the spread was much higher than I have ever encountered doing it myself and cost substantially more than the extra trading fee. It also took an unexpectedly long time between submitting request and receiving trade details.

Many people will also find the cost of the trade discounted form their quarterly fee.

[77ss]

When do most people do this?

Start of tax year?
End of tax year? (In case any other CG needs to be included, like property or something else)

When there are sufficient CG? (Anytime in the year? There has been a recent downturn, markets have bounced back a bit, is now a good time? Or should you wait to see if goes up further?)

Whenever I think it right to take a profit! It does tend to be weighted towards either the end or the beginning of a tax year (purely in order to generate sufficient funds to move into an ISA) - I don't care which - it depends on my other dealings throughout the year.

Sometimes my allowance is used up before the end of the tax year (it has been this year), sometimes it isn't. I don't let that influence my decisions (I don't have properties to sell). If there were a takeover, that could take me over the limit, but so be it - it has never yet caused me a problem and I prefer not to consider 'ifs' too much.