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Where Taxpayers and Advisers Meet

Any way to carry over a cgt gain from this year into next

jsmith07611
Posts:5
Joined:Tue Jan 14, 2014 9:29 pm
Any way to carry over a cgt gain from this year into next

Postby jsmith07611 » Fri Mar 18, 2016 1:05 am

the budget yesterday and it seems that capital gains are going to 10% and 20% instead of the current 18 and 28. I havn't studied the budget thoroughly but it seems that these are the rates besides for selling property.

therefore if one has profits this year it would be worthwhile to try and make a loss this year and a profit next year. for example if someone made 10k profit in the 28% band this year. it would be worthwhile to try and loose that money this year and gain it back next year.

so as i am not an accountant i thought of two possible ideas, but i am sure that others probably have more in depth ideas.

1 idea was to do a hedge cd trade on lets say the ftse future or dax (to avoid overnight costs) so buy 10 lot ftse and sell 10 lot ftse. then wait until 5 april. say the ftse moved by 100 points up. so close the loosing trade and immediately rehedge it.so you will have realised the loss this year of £1000 and next year would close the new hedge at a gain of 1000. the costs would be 3 spreads of around 1 pip so that is £10 per point x 3 is £30 but would save you £80 on tax (£1000x0.28-0.2). the more the ftse moves the better.

one could even avoid the spread of the third trad by doing a close by hedge on the mt4 platform

2 idea was to buy a vanilla option. so lets say the gbpusd is 1.44. buy an option to buy at 1.2. and hedge it by selling gbp/usd therefore there is very low risk, nearly impossible. but when you buy an option you realise the cost straight away which is capital gains loss and later when you close it you realise the gain which you could do next year.

interested in hearing your thoughts as there are only two weeks left

regards

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: Any way to carry over a cgt gain from this year into next

Postby RMC » Fri Mar 18, 2016 9:46 pm

Can you explain your ideas 1 and 2 in simple terms so that we can understand?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Any way to carry over a cgt gain from this year into next

Postby bd6759 » Sat Mar 19, 2016 1:09 am

You do not create a loss by buying an option. The option is an asset that you acquire. It is when you dispose of that asset by exercising the option that you generate a gain or a loss.

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: Any way to carry over a cgt gain from this year into next

Postby RMC » Sun Mar 20, 2016 9:50 am

If one re-invests the capital gain in EIS or SEIS shares within 3 years, one can claim deferral relief and the original gain won’t crystallise until the EIS or SEIS shares are disposed of at a profit. This is not a common occurrence, so CGT may be avoided altogether.

Additional generous tax reliefs are available for EIS / SEIS investments.

jsmith07611
Posts:5
Joined:Tue Jan 14, 2014 9:29 pm

Re: Any way to carry over a cgt gain from this year into next

Postby jsmith07611 » Sat Jan 21, 2017 11:55 pm

Thank you for replying (sorry i only saw the reply now when coming to year end)

I was looking into eis and was wandering how long i would need to hold it for to defer cgt. I understand that for the other advantages or eis, such as income tax relief i would have to hold the eis for 3 years.

but if i only wished to defer cgt, how long would i need to hold it for.

thank you


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