Best way to not get screwed on capital gains / other taxes?

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20th Mar '21 by scotty12314

18 comments 851 reads

Dear Stockopedia Members,

Forgive my ignorance here (I am new to the investment game) and I have built quite a significant position in my trading platform using Hargreves Landsdown. I love the market and the game but now that I am making quite a bit of money, I am wondering how you can protect these gains more efficiently? I've been reading about using a SIPP or an ISA but the problem with that is there are some stocks that are not available to invest in.

I am wondering what other investors do here to protect their trading / investing gains ?

Any advice would be greatly appreciated.

Cheers

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About the Author

Scotty12314

Premium Member

18 comments

PLS1nve5t

20th Mar '21

Not a problem for me as everything is in ISA's and SIPP, the only other way I know of to avoiding CGT and dividend tax would be to use spread betting.

What sort of stocks do you wish to invest in that cannot be held in an ISA / SIPP - can they be bought as a spread bet ?

sharw

21st Mar '21

You really should consider an ISA. If you take it out with some providers such as x-o or iWeb there are no admin fees. Apart from no CGT there is no tax on dividends. People stopped using ISAs when the credit for ACT paid on dividends was withdrawn but were then clobbered when basic rate payers had to pay tax on dividends from April 2016 and even more when the tax free allowance was cut from £5k to £2k. In the same way there are rumours that CGT will be tightened (higher % to pay, lower tax free allowance) and many commentators were surprised it was not in this year's budget. You never know so you really should consider taking out an ISA - you have nothing to lose. Note that allowances cannot be carried forward so you have about 10 days to use this year's.

Rusty2

21st Mar '21

Yes move everything into ISA and SIPS, that what I did without paying capital gains tax.

Which investments can’t be held in an ISA or SIPP?

You can do £20k in this years ISA but you only have a short time to do it, should be easy with HL though.

Rusty2

21st Mar '21

If you need to sell shares to fund the ISA you probably need to do it tomorrow or on Tuesday as there is 4 days settlement time. As soon as new tax year starts you can then do this again, so that’s £40k.
I’m moving away from HL as I find their fees are too high.

You can have ISAs with different brokers as long as they are different tax years. You can only have 1 ISA per tax year.

timarr

21st Mar '21

Which investments can’t be held in an ISA or SIPP?

Bitcoin?

I use the term "investment" loosely ...

timarr

Indie

21st Mar '21

You can have more than one stocks-and-shares ISA and trade in all of them, but you can only subscribe (ie put new money in) to one of them in any tax year.

I’ve just been looking into this as I have an ISA with a stockbroker and want to open another with Barclays. The advice I’m quoting is from Barclays. (HMRC advised me that they can only give basic advice and to ask an ISA manager as it’s a tax-free thing so HMRC aren’t really into it!)

I am doing a partial transfer of cash that’s in the existing one. I must move the amount I’ve subscribed this year, and can then move as much as I want from previous years. As it’s an ISA-to-ISA transfer, it stays within the ISA system and does not count towards the annual subscription. Sometime, I might transfer investments as well. If I wanted to add more this tax year, I must add it to the existing one before moving it as I won’t be able to put more in after.

That’s what Barclays advised. Hope helpful.

Rusty2

21st Mar '21

Not sure, can you buy bitcoin in an HL trading platform, which I assumed was shares? I did read you can buy bitcoin in a HL SIPP.

There are some foreign shares and ETFs that can’t be held in an ISA but I found them fairly rare and HL are better than IG Group (LON:IGG) in that respect.

Spreadbetting is another way of avoiding tax but costs can be higher.

Rusty2

21st Mar '21

This year I think you need to transfer the whole amount.

Good luck, I have been trying to transfer some cash from my ISA for weeks, HL say they never receive the transfer forms or emails. Of course it is in interest to keep hold of my money for as long as possible but it is highly frustrating and makes me more inclined to move even more. With investments some have reported it taking 6 months to transfer to another provider. Barclays had a lot of complaints a few years ago.

GrahamF

21st Mar '21

Pedant alert - to be clear you can invest in more than one isa per tax year as long as they are of different types (e.g. a stocks and shares isa and an innovative finance isa) and the total doesn’t exceed the £20k allowance.

GrahamF

21st Mar '21

Scotty

Are the shares you are wanting to buy but can’t buy them in an ISA listed on an exchange that HMRC don’t recognise by any chance?

There are vast numbers of shares that are available to hold in an ISA so I would just choose from those.

Alternatively, wait until you’ve got some losses (just a matter of time unless you are a genius or incredibly lucky or both) and crystallise those losses to offset your gains.

The other option is potentially to buy a collective investment such as a fund or investment trust that invests in the type of company that you cannot hold directly in an ISA and hold that fund/trust in the ISA instead. Unsatisfactory because they may hold other stocks that you are not interested in, but at the same time if this is so exotic that you cannot hold it in an ISA then perhaps you would benefit from having the services of a specialist fund manager for the type of investment.

Rusty2

21st Mar '21

OK but we were talking about Stock and Share ISAs.

GrahamF

21st Mar '21

Ah. Fair point. I was thinking about investing generally. But as you say, the question was really about stocks and shares.

Hartshay

23rd Mar '21

The issue with Hgl is that there a lot of shares you can’t trade ,.. even uk ones!#

Rusty2

23rd Mar '21

Who is Hgl?

I don’t find many uk listed shares I can’t trade. There are a few foreign companies that are listed in London that are unavailable but not many.

PLS1nve5t

23rd Mar '21

I read that as a fat fingered attempt at HL, - I could be wrong though

Metatron

24th Mar '21

Your preference should be an ISA.One just need to hit one big multi-bagger to end up paying Capital Gains Tax with a standard trading account .No guarantee that the free Capital Gains Tax allowance of £11k will remain given the National Debt the UK govt is running up.That mat be true as well of future ISA's but difficult to believe a Tory govt would apply Capital Gains to already held ISAS.

Samuel Jacobs

25th Mar '21

I also find Hl fees quite high just out of interest who are you looking at moving too.

Rusty2

25th Mar '21

I have moved some of my ISAs to IG Group (LON:IGG). Fees are much lower if you do 3 or more trades each month, especially on US shares.

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Best way to not get screwed on capital gains / other taxes?

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Scotty12314

18 comments

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