RE: Sp19 Mar 2025 21:57
Responding to Yellowstuff at 17:33 earlier:
Taking some profits in this tax year and saving losses for the next tax year might help, but again it depends on peoples’ circumstances. Some people sometimes try to avoid tax at all costs, but often that can be cutting your nose off to spite your face. For example (my shares are in an ISA, but let’s pretend they are in a taxable account):
My GGP average is, say 7p. I could sell some right now to look in some gains, make use of the £3,000 allowance, and/or pay CGT at the lowest rate (currently 18%). If I don’t do this, I may have to pay 24% tax in future tax years. That seems worse because it’s a higher rate, but:
Sell now – proceeds £10,000, cost £5,000 = gain £5,000. Say it’s all taxable so £5,000 x 18% = £900. Cash after tax £5,000 - £900 = £4,100
Sell next year (let’s pretend the price doubles in that time – proceeds £20,000, cost still £5,000 = gain £15,000. Say it’s all taxable at 24% so £15,000 x 24% = £3,600. Cash after tax £15,000 - £3,600 = £11,400.
I’ve paid four times as much tax, and at a higher rate – boo, but in the above situation, I’m much better off selling next year rather than now. Of course, it also depends on what subsequently happens with the proceeds, and what happens in the future (it might not double…). It’s all quite complicated, both the tax itself and how it ties into the decision-making process and real life for each person.
As is very often the case, the answer is ‘it depends’! But generally speaking, yes it might help.
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