Using Capital Gains allowance

[derektrimblitz]

Hi all

Could anyone tell me if my thinking is correct on using my capital gains allowance.

Aside from pension or Isa I have a stock trading account which has some good gains since started. When I sell these stocks I assume that I'll be taxed on the capital gain.
I don't currently use my annual capital gains allowance.

If I sell enough of the shares to show a gain of £11k then I can use my allowance. Then buy back into the market and in effect reset my tax and gain position.

Rather than selling them in years to come and paying tax on a possible amount over £11k

Is that a plan?

[schmunk]

Yes, but you have to wait 30 days between sale and re-purchase, otherwise you'll be caught by 'bed and breakfasting' rules which treat the sale and re-purchase as being at no-gain / no-loss, meaning you retain your original cost basis.

Some guidance here (just the first link I came to, not a recommendation!): https://wealth.barclays.com/en_gb/smartinvestor/be...

[Eric Mc]

When does HMRC decide that a transaction is not of a capital nature and therefore subject to Income Tax rules rather than Capital Gains Tax rules?

[Ozzie Osmond]

Eric Mc said:

When does HMRC decide that a transaction is not of a capital nature and therefore subject to Income Tax rules rather than Capital Gains Tax rules?

That's a good point, because "trading" sounds a lot like self-employed Income rather than Capital Gains.

http://www.rossmartin.co.uk/starting-in-business-7...

The badges of trade include:
1. The subject matter of the realisation.
2. The length of the period of ownership.
3. The frequency or number of similar transactions by the same person.
4. Supplementary work on or in connection with the property realised.
5. The circumstance that was responsible for the realisation.
6. Motive.

[Eric Mc]

Thanks for listing those points. Many people don't seem to realise that there is sometimes a fine line to be steered between "capital" and "revenue" transactions.