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Dumb question about partial sale of holding
Rishan
Posted: 18 September 2017 15:13:17(UTC)
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I can't get my head around this and feel like I'm failing to grasp something basic.

You know how there are the 'book cost' and 'value' columns in a portfolio.

If you buy £5000 (book cost) of something and it increases by, say, 60% (value).

If you then sell £2000 of the increased value, it doesn't reduce your book cost to £3000. Ok, so I understand why it doesn't do that, but surely now it is not a true reflection of the initial outlay? Is the book cost now totally meaningless in relation to the rest of the holding?
Alan Selwood
Posted: 18 September 2017 16:32:56(UTC)
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Rishan,

It's just the way they do it! They record the book value and cost of the shares/units you currently hold with them, but not the ones you no longer hold.

Example:
You buy 10,000 shares costing £5 each = £50,000 total cost
They rise in value to £10 each = £100,000 new value.
You sell 5,000 shares which originally cost £25,000 and take out £50,000 cash.
You retain 5,000 shares which originally cost you £25,000 and which now have a value of £50,000.
Rishan
Posted: 19 September 2017 08:46:59(UTC)
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Thanks Alan, that's cleared it up.

Bottom line, you always need to know the original purchase price of each share to calculate any further capital gains on partial sales.

Sorry for the 101 everyone.

Tony Peterson
Posted: 19 September 2017 18:57:47(UTC)
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Rishan

If you hold out-of-ISA equities that increase in value make sure you keep a hard copy record of all your purchases in case you should (heaven forbid) take more than 11k profit out ,or sell more than 44k worth in a single tax year.

But it is a jolly good idea to get as near as possible to both numbers without exceeding them.

Jay Mi
Posted: 19 September 2017 19:52:47(UTC)
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Tony Peterson;51260 wrote:
Rishan

If you hold out-of-ISA equities that increase in value make sure you keep a hard copy record of all your purchases in case you should (heaven forbid) take more than 11k profit out ,or sell more than 44k worth in a single tax year.

But it is a jolly good idea to get as near as possible to both numbers without exceeding them.



Silly question.

What is the significance of 44k?
Tony Peterson
Posted: 19 September 2017 20:05:28(UTC)
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If your gains exceed (a bit more than - not sure how much though) £11k OR YOU DISPOSE OF MORE THAN four times the exempt amount you have to fill in ALL your transactions on your tax form.

Which can be a bloody great pain. Believe me. I've had to do it once or twice.
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Jay Mi on 19/09/2017(UTC)
Rishan
Posted: 19 September 2017 20:38:27(UTC)
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Thanks Tony. Yes, I was aware of both of those figures and somewhat related to my posting the original question. I have never got near the limits, but with the new dividend tax I would like to get as much as I can into the ISA, which means selling some out-of-ISA equities (or Bed & ISA them when the time comes - same rules apply!)
Tony Peterson
Posted: 19 September 2017 21:47:48(UTC)
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Rishan

The new dividend tax makes it worthwhile to keep your high yielding investments in-ISAs and your lower yielding growth investments out of ISAs.

But I cannot stress how important it can be to use up as much as possible of your CGT-free allowances every year in the out-of-ISA stuff.

If you can work out what I mean.
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Tim D on 20/09/2017(UTC)
Rishan
Posted: 19 September 2017 22:04:07(UTC)
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Absolutely Tony, I've been thinking along those lines ever since Osborne announced the wretched dividend tax. I've only been investing 'properly' for a few years, but I wish I had been bit wiser about the ISA earlier. I'm working so can contribute new money to it each year, but I also need to get my nominee stuff sheltered (which means reducing the amount of new money going in!). Looking at the way things are going politically we are only going to get hammered for our out-of-ISA dividends even further.
RFE
Posted: 23 September 2017 08:54:00(UTC)
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What is this 11k out of ISA exemption? I recently moved to the UK from Switzerland and am not up on all your Investment schemes. Are you able to have a normal Share dealing account and be exempt from up to 11k in Gapital Gains? Can you have both an ISA and a normal account and reap the Tax advantages on both? I thought the 20K ISA exemption per year was great but if you are able to use both...Wow...That means I could open a low cost dealing account with Trading 212 or someone to be able to actively manage some Shares and save lots on Dealing Fees with AJ Bell.

Our "Pension Manager" at work didn't mention this, only SIPP and ISA's.
Tony Peterson
Posted: 23 September 2017 09:36:39(UTC)
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Provided you do not realise more than 11.(something) thousand in gains from the sale of less than four times that exempt limit you do not have to declare the gains on your tax return. So it saves a lot of hassle (like not listing every purchase of the asset). The base cost is the average on all purchases - so for long held shares it can be a tax on inflation.

You are not liable for tax on ISA gains. And you have to sell any asset to become liable for tax on gains.

Someone will give the number more accurately I am sure. We just keep an eye on our proceeds and our gains.



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RFE on 23/09/2017(UTC)
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