Tax Saving Tip – No.1

Ray Stewart General, Tax Matters Leave a Comment

Welcome to the first in a series of posts detailing tax saving tips.

This first post is about using, or losing, your annual capital gains tax allowance.  Presently standing at £9,200 the annual cgt allowance is one of those that you will lose if don’t fully utilize it each year.

Yes, even in these difficult recessionary times, there are people who own assets generating capital profits. These assets can quite legally be manipulated to force a chargeable gain to be realized and use the annual exemption to the full.  Why would you want to do this – well, a tax payer who lets the annual cgt allowance slip away unused is actually wasting £1,656 in hard cash tax savings.

The easiest assets to use to ensure all of this tax free allowance is used are shares.

The simple method is to sell enough shares from your portfolio to realize a capital gain as close to the annual exemption as possible.  Your spouse can then rebuy the same shares a few days later.

That’s it.  The result of this bed and breakfasting as the professionals call it, is to realize the gain tax free and yet, as a couple, you still keep the same portfolio of shares.

A few years back people used to sell some shares around the end of the tax year (5th April) and then buy them back themselves early in the new tax year for a similar effect.  However, the tax rules no longer allow this.  A different individual (spouse) can legally buy them, but you cannot buy back your own shares without invoking rules that will cancel out your tax saving.

I acknowledge there will be some dealing costs with this tip, but they are negligable compared to the potential tax saving available.

If you would like to discuss this tip in detail, please do not hesitate to contact me on 0800 047 0731 anytime.

I look forward to hearing from you!

~Ray

Ray Stewart
I am a qualified Certified Practising Accountant having passed my final exams way back in 1981. I actually can’t believe that was 37 years ago!! Anyway, I am now in my 60’s and I have been running my own business since May 1983. And before you ask, no, I have never regretted a moment of it! Part of the membership requirements of my professional body now dictate that I spend quite a lot of time on “CPD” - continuing professional education (one of their better ideas) - and over the last two years I decided to study business growth and marketing. I have learnt such a lot and that knowledge has radically changed my old “accountants” approach to business. It has made such a difference to the way I work and operate I feel that I just have to pass on this knowledge. It is simply too powerful to hold back!! - but I will try and do it in simple terms rather than expecting you to spend hours, as I had to, working through the difficult language that trainers seem to use to pass on their concepts. I hope you find the blog a useful resource and interesting place to visit as the months pass. I will do my best to keep up the flow - but if there are any topics you would like me to cover, then please let me know. Ray Stewart
Ray Stewart
Ray Stewart

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