Should trades be averaged under the "same day" capital gains tax rule?
Should trades be averaged under the "same day" capital gains tax rule?
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Paul Razvan Berg · External communityPost link
External question — Personal Finance Stack Exchange
Author: Paul Razvan Berg
Original post: https://money.stackexchange.com/questions/123350
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Say you have the following list of trades:
Buy 100 XYZ at £50 a share on March 1st
Buy 100 XYZ at £51 a share on March 1st
Sell 200 XYZ at £60 a share on March 20th
This would result in a net profit of £1,900, disregarding of whether you average the first two trades or not.
Now, according to the
official guides
:
All shares of the same class in the same company disposed of by the same person on the same day and in the same capacity are also treated as though they were disposed of by a single transaction, TCGA92/S105 (1)(a).
It seems to me that I should
not
report the first two trades as two distinct trades at all, should I? They should be replaced with:
Buy 200 XYZ at £50.50
I know that in this particular scenario the net gain would be the same, as there are no disposals of the same asset on the same day, but it'd be good to know the correct approach.
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tbm · External communityPost link
External answer — Personal Finance Stack Exchange
Author: tbm
Original post: https://money.stackexchange.com/a/124465
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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"bed and breakfasting" rules apply since you are selling within 30 days of acquisition.
See
this HMRC publication
.
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: Paul Razvan Berg Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/questions/123350 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Say you have the following list of trades: Buy 100 XYZ at £50 a share on March 1st Buy 100 XYZ at £51 a share on March 1st Sell 200 XYZ at £60 a share on March 20th This would result in a net profit of £1,900, disregarding of whether you average the first two trades or not. Now, according to the official guides : All shares of the same class in the same company disposed of by the same person on the same day and in the same capacity are also treated as though they were disposed of by a single transaction, TCGA92/S105 (1)(a). It seems to me that I should not report the first two trades as two distinct trades at all, should I? They should be replaced with: Buy 200 XYZ at £50.50 I know that in this particular scenario the net gain would be the same, as there are no disposals of the same asset on the same day, but it'd be good to know the correct approach.
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