CGT loss harvesting

[williaa68]

Unsurprisingly some of my investments are now trading at a loss. I don't necessarily want to sell them outright but it strikes me that as I have some considerable gains from earlier in the year which takes me over the CGT threshold there may be some sense in selling them and buying equivalents. Eg sell an ishares FTSE 100 etc and buy another FTSE 100 Etf instead. Provided the loss realised is more than 2 x commission on sale / purchase + spread * 28% why wouldn't I do this? So ishares bought for £11k, sold for £10k, £30 round trip commission, say £50 spread, realised loss is £1030, less spread is £980 * 28% = £274 value. Anything obvious I am missing, please? Tks in advance!

[sumo69]

Any CGT loss cannot include the costs of your repurchase, just those of the sale of the loss making investment.

But yes, if you have other gains in excess of the annual exemption of £11k, it is probably a good idea to sell some loss making investments to bring the net gains back down to the AE.

If you want to buy back the investment you sold, you need to wait a clear 30 days otherwise you will fall foul of the "Bed and Breakfasting" rules.

David

[williaa68]

Thanks David. Am aware of B&B rule I was just looking for confirmation that HMRC don't look through the security to the underlying economics - ie swapping one ETF for another is legitimate even if they are largely identical from an economic exposure perspective. It seems they are so every cloud etc....

[Ozzie Osmond]

If you have an OH the usual way to sidestep the 30 day B&B rules is to sell from one name and buy simultaneously in the other. This enables you to achieve your tax planning objectives without any market risk.

Losses crystallised in the current year have to be taken into account before you get to use the annual CGT allowance of £11,100

(I think I'm right in saying that any crystallised losses brought forward must also be absorbed before you get to use the annual allowance.)

Put simply, don't crystallise more losses than you have gains or you might lose the annual allowance. It can't be rolled forwards.

[twinturboz]

Ozzie Osmond said:

Losses crystallised in the current year have to be taken into account before you get to use the annual CGT allowance of £11,100

(I think I'm right in saying that any crystallised losses brought forward must also be absorbed before you get to use the annual allowance.)

Put simply, don't crystallise more losses than you have gains or you might lose the annual allowance. It can't be rolled forwards.

I think and happy to be corrected you have to use your losses for a particular year against the gains in that year to take you down to the allowance, if you then still have a gain above the allowance you can use losses from previous years.

On the other hand if after taking your losses down to the allowance your still left with losses then you can carry those forward to use in the future.