Capital Gains Tax  

Use CGT allowances before the tax year-end

  • Describe the recommendations of the OTS
  • Explain how acquisition costs are calculated
  • Describe how to make use of the allowance and stay in the market within 30 days
CPD
Approx.30min

By

Bed and ISA

Another way to avoid being out of the market for 30 days is to sell funds and buy them back in an Isa. Shares held within an ISA are generally free of both income tax and CGT.

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Bed and spouse

This is where the shares are sold by an individual and bought back in the name of their spouse or partner. The disposal of shares crystallises the gain and allows the individual to make use of their CGT allowance. Of course, to buy back the shares, this may require a gift of the disposal proceeds to the spouse/partner.

Buy a similar asset

Share matching rules mean that the gain won’t be crystallised in the normal way if the investor buys back into the same fund within 30 days. However, this can be overcome by buying assets in a similar fund and means the investor is not out of the market.

Dave Downie is technical manager at Standard Life

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. The Office of Tax Simplification recommends that CGT allowance should be:

  2. How are gains on shares or units calculated?

  3. Calculating the acquisition cost is red herring, true or false?

  4. What impact do accumulation shares have on costs?

  5. Which of the following is NOT a technique for allowing investors to crystallise gains to use their exemption, and still remain invested without being out of the market for 30 days?

  6. income as either interest or dividends, true or false?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe the recommendations of the OTS
  • Explain how acquisition costs are calculated
  • Describe how to make use of the allowance and stay in the market within 30 days

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