capital gains -use of allowance /disposals

capital gains -use of allowance /disposals

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I have, for example, 7500 shares in company X with the following profile
No of shares capital gain
A: Bought 99 1500 7500
B: Bought 00 2000 7500
C: Bought 01 2500 7500

As I understand it I am required to dispose of tranches of shares on a last in first out basis. Following the bed and breakfast 31 day rule as well as LIFO rules I dispose of tranche C this year to get my capital gains allowance.

Next year I have to dispose of tranche B (£7500)& C (no gain as sold last year) to get my capital gains allowance. In third year I have to dispose of tranches A, B &C to get at the 99 gains.

This means that not only am I continually putting ever increasing tranches of the shares at risk over the that 31 day period, but selling and reacquiring the same shares, previously sold on which there is no longer any gain in order to get at my capital gains allowance in the earlier years.

I am therefore unnecessarily paying brokers' fees and stamp duty, on the shares disposed of in previous years on which there is now no gain, but which I believe am forced to sell to access earlier gains. I would like to know whether one has to follow this procedure of selling the grouped tranches even if the shares are held with different brokers and their purchase date and class can be separately identified.

Surely no legislation could have meant such a peculiar situation to arise, have I interpreted it correctly?? There must be ways round it would any one please advise?

Allan Chandler

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By neileg
01st May 2002 15:37

Darrin, you are the strongest link!
Succinct and accurate!

In the days before the 31 day rule we used to arrange special brokers fees for our clients because all the broker did was produce some paperwork!

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