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you have a gain and then buy them back, so that you
crystallise the profit  or sell them and arrange for your
wife or partner to buy a similar amount. Both routes
work, but you need to handle the details with care: you
should not buy shares back for at least 30 days after you
sold and if your wife buys you need to make sure that
the transaction is clearly arm s-length.
If you follow a sell and buy-back policy, it makes a
great deal of sense to put your shares into joint names
 you simply double your annual tax-free allowance.
Nor do you need to be over-precise in your sell and
buy-back programme: if you have a profit on a tracker
unit trust, you can sell that and re-invest in another
tracker  in that case you do not have to bother so
carefully about the timing.
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And New Rules for CGT and IHT
Example: CGT Losses And Married Couples
Fred Telfer is showing a loss on his BP shares,
so he decides to sell them. But his wife, Janice,
takes a positive view of oil shares; so, quite
independently, she buys them back. (When this
is planned, it is known as  bed and spousing ).
Fred puts the loss in his tax return, but his smart
accountant sends out some warning signals.
Fred s accountant explains that the Revenue have
extended to individuals their rules which targeted
companies trying to avoid tax by making use of
capital losses, and might not allow Fred s loss.
The accountant offers two pieces of advice: allow
30 days or more between Fred s sale and Janice s
purchase, and he also suggests that Fred and
Janice should not discuss these deals between
themselves.
Fred thinks this is absurd: is the message that
husband and wife should not discuss their finances
with each other? Well, says the accountant, the
taxman is taking a wide view; he tells Fred and
Janice to talk to him first if either of them thinks
of another deal like this.
Who Pays CGT?
CGT becomes due when you sell or give away an asset
 in the jargon, when you make a disposal. There is a
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7 Ways For Anyone to Boost Their Income
range of exemptions to CGT, the most important being
your own home  your  principal residence .
If you own more than one home, you have to nominate
one as your principal residence  which you also have
to do if you marry when you and your wife each owns
a house. If you buy a second house, you can tell the
Revenue within two years which is your main home, or
they will make a practical assessment: any profits you
make from selling a second home are subject to CGT
(though there are ways of softening the blow  see later
in this chapter)
Where Transfers Are Tax-free
There is no CGT to pay when assets are transferred
between husband and wife nor between civil partners.
A couple living together have to pay CGT on all
transfers of assets  but they have a consolation: each of
them can own a principal residence, where the gain will
be tax-free when it is sold.
In principle, CGT covers gains which have been made
since March 1982. Each year, every taxpayer gets a tax-
free allowance  for 2008 9 the allowance was raised by
£400 to £9,600. So, a couple who own shares in their
joint names, can make gains of £19,200 in a year before
they have to pay tax.
Tax-Free Gains
You may not expect to lose money on the sale of your
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And New Rules for CGT and IHT
main home, but always remember: if the sale of an asset
is free from CGT, then you get no allowance for losses.
People who lose money on gilt-edged or on an ISA get
no help from the tax system. If you do make losses,
these can be carried forward.
Out of a long list of other exemptions from CGT, two
of the most important are private cars and personal
possessions which have a useful life of less than 50 years
from the date you acquired them  such as a boat or a
caravan.
Tax On a Take-Over
Apart from property  discussed later in this chapter
 most people will have faced paying CGT when they
sold shares or unit trusts.
But there is one trap you need to be aware of  when
you hold shares in a company which is taken over. You
can expect to get a premium over the stock market
price, so that it becomes the sort of problem you may
wish to have. But if the bid is in cash, you have made
a disposal and face the prospect of paying CGT. This
seems unfair to some people, as you did not choose to
sell. There are four things you can do:
" Move the shares into joint names  if you have
not already done so  to access £19,200 annual
exemption: you just need to fill in the simple
stock transfer form and post it to the company s
registrars.
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7 Ways For Anyone to Boost Their Income
" If you are offered shares or cash in the company
which makes the bid, take just enough cash to
keep you below the CGT level. On the shares you
will be given  roll-over relief; if you held 100
shares in Plastics plc and now have 150 shares in
Superplastics plc, you have not made a disposal and
the new 150 shares are given the same cost price as
your original 100.
" You may be offered a loan note alternative. You are
given a piece of paper which pays a modest rate of
interest, normally around Bank of England base
rate, and which you can cash in, say, over a five-year
period. There is no disposal, because it is a paper-
for-paper exchange which you can turn into cash
when it suits your tax position  in effect, you have
been given a form of bank deposit.
" If you are still facing a CGT bill, which you are not
keen to pay, then you should realise available losses
before the end of the financial year. If some of these
losses are in shares you would like to keep, then
sell them in the stock market and arrange for your
partner to buy the same number. If you invested in
an Enterprise Investment Scheme (see the previous
chapter) then you can defer a capital gain up to the
amount of your investment  and if you keep on
investing, you can keep on deferring.
Saving CGT On Property
You may be one of the growing number who see
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And New Rules for CGT and IHT
property as their pension. By 2008, share prices were
still below the level they reached at the end of 1999
 and many investors suffered badly in the dotcom
collapse which followed.
Just what do people mean when they say that property
is their pension? Look at some possible scenarios:
(a) You own a large house, which you sell, and you
and your partner move into a flat. The profit from
selling your house is tax-free as it is your principal
residence and you use some of the proceeds to buy
an annuity.
(b) You own a second home as well as the house you [ Pobierz całość w formacie PDF ]

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