When are Capital Gains actually realised?

Hi all,

It’s that time of year again! Time to start thinking about tax!

Does anyone know precisely when CG are realised/precisely when one becomes liable for CGT?

Is it, the moment when;

  • The shares are sold and the profit is there to be reinvested?

  • The profit gained is actually settled?

  • The profit gained is withdrawn from the FT pot to a bank account?

Essentially, I’m thinking of selling £12k of shares (profit) on 5th April and transfer this across to my ISA when this settles in the following financial year.

However, I’m not sure if I need to have pulled the money out of my account by 5th April (so I’d have to sell shares near end of March to give time for settlement) to then reinvest in my ISA from 6th April.

Hope this makes sense! And help greatly appreciated!

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It’s when you sell.

It also depends on what the asset is classed as when you sell based on if your bought and sold recently.

There’s the same day rule, 30 day rule, and section 104 holding rule.

Everything of the same asset type held for over 30 days is considered under a section 104 holding and you manage these as one average holding. So when you sell your gains are based on the average of that 104 holding.

Anything bought or sold within 30 days is counted individually not as an average of your whole asset. Everything bought or sold on the same day is considered one transaction as well (eg if you sold at three points through the day that’s counted as one sale and averaged).

That’s my basic understanding of it.

Remember capital gains counts on other non stock assets as well if you’ve sold any assets of any significant value.

Also remember if you’ve sold any stock though out the year you must count those gains in accordance with the rules.

Also remember you may be able to claim back cgt based on any sales where you were at a loss (more fuzzy on that one)

You will want to read up on it carefully. I’m not a tax person, don’t consider anything I’ve said as accurate

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Thanks, very helpful. I’ll read up more on that Section 104 rule.

By asset type, is that shares vs property etc.?

Asset class I think they call it.

E.g RDS class B are all considered one type
RDS class A are considered a separate type

So if you have shares in both they’re not classed under one holding

RDSB in one basket, RDSA shares in another basket. Same with any type of asset.

If you’ve been buying and not selling then calculating cgt probably won’t be to hard. The issue may arise if you’ve been buying and selling frequently and if you’ve been frequently selling and rebuking the same asset in short periods of time.

No expert on this. HMRC has a whole manual on the stuff

Yeah as a new trader this is something I have not yet fully looked into, luckily (in this circumstance) it will be many, many years if at all before I will be seeing any where near the level of profit required for this to be something I have to worry about.

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I think this is a great advert for opening an ISA with FT. After all, the vast majority of investors will not be investing more than £20k per year, and an ISA means you don’t have to worry about CGT.

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This time last year I thought that too but then got lucky with a stock that went through the roof and now face a big tax bill if I and when I decide to sell. Certainly not complaining but in hindsight wish I had switched to an ISA much sooner. Probably worth doing as soon as you get to the level of having £1k+ in a single stock. The rules are clear enough but it has been complicated at times getting my head round it and I now need to carefully record gains and losses. An ISA would have eliminated the need entirely.

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Its calculated from the date you sell. Also make sure you deduct the amount you paid for the shares from the value of the sale to work out the gain (profit). I recently did this myself and rebought the same amount of shares I sold but in my ISA. The process wasn’t quick. As well as the time it takes for the money to settle you will need to factor in the time it takes Freetrade to move money. Transferring cash from GIA to ISA is a manual process requiring customer service and took about 3 days for me so you should expect to be out of the market for 5-6 working days altogether.

Anything over 30 days old is averaged in one big bucket so you cannot calculate the gains based on the original individual buy prices but on the average of the entire holding (assuming you haven’t bought any in the last 30 days)

I have an ISA already - unfortunately, the ISA is doing really badly, and my GIA is doing really well :sweat_smile:

I basically want to cash out as much as possible within my CGT allowance and use it as a initial funding bump for next year’s ISA.

It actually looks as if the 30 day rule (which was designed to stop ‘bed and breakfasting’) doesn’t apply if you rebuy the shares in an ISA as this is essentially a manual ‘Bed and ISA’ which basically crystallises your gain for CGT purposes (unlike selling then rebuying in a GIA).

Will be looking to make the switch to ISA at the end of the month, as I’m only in for a few hundred will be able to afford to finance the re-buys upfront without having to wait for the sales to clear.

I don’t suppose anyone knows the situation for CGT if, for example, a holding was bought out and say in exchange for OMI I got Newmont shares in exchange?

Does anyone know if i buy £200 of uk shares and pay £1 stamp duty (at 0.5%)
Then sell the shares.

Then a week later for example i rebuy the same shares at the same total price of £200 do i have to repay £1 stamp duty? or does the first 1£ count?

You pay per transaction, not stock. So yes, you pay.

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