Can anyone help with advice on the rules around selling from an ETF portfolio to crystalise profits and then buying back again?
I have a small profit on my portfolio and want to sell before the end of the tax year, so that I can count the gain against my CGT allowance. However, I would then like to use the money to buy back into the portfolio again.
If I’ve understood it correctly, there are something called “Share matching rules” that effectively prevent you from buying the same shares back within 30 days, as this sale would be ignored when calculating the gain on the shares when they are eventually sold again. However, what I’m not clear about is how this works with an ETF portfolio, where the portfolio is made up of dozens of shares. If I have, for example, the Growth 9 portfolio, could I sell this and buy straight back into a Growth 8 portfolio, or would these be considered too similar? Or would I have to wait 30 days before buying back to be sure of not falling foul to these rules?
Any help with clarifying this would be welcome - thanks.
I am selling to realise CGT too @johnp my understanding :-
The ETF is the Share, not the underlying shares, nor the portfolio used to proportion them.
You can’t re-buy the ETF for 30 days.
As LoveToInvest indicates, you can buy an identical ETF from a different investment company (like Vanguard FTSE100 vs Blackrock FTSE100…strange but how it is - different Share).
Problem with buying a different predefined portfolio though, is you are likely to end up in the same ETFs, even if you buy a different risk-level (just in different proportions).
Sell in good time that the transactions have Settled by the end of the Tax Year (ensures IE Report shows correct tax-year and you still own them before).
Irrelevant for holdings in an ISA or SIPP of course, also if selling in a GA then rebuying in an ISA or SIPP
I currently have a managed portfolio, made up of 10 equity ETF’s, 4 bond ETF’s and about 1% in cash. If I sold all this and bought back into another managed portfolio with a lower risk profile, the new portfolio would almost certainly contain some of the same ETF’s. So, if the ETF is the Share, then that doesn’t sound like an option. I’ll probably sell in good time before the end of the tax year and reinvest in a new InvestEngine portfolio after the 30 days have passed in the new tax year. I’d prefer to do this than move it to a different company - my InvestEngine portfolio has performed well, their costs are low and their app is nice and easy to use.
@johnp the above information is only relevant if the money is in an IE General Account. It is not applicable if it is in an ISA or SIPP (as you are not liable to CGT on them).
Also, waiting 30 days is not necessary if moving the money from a GA to an ISA in the next Tax Year. Just sell down by the 5th April then deposit on the 6th.
The money is in a General Account. I’ve used all my ISA allowance.
I could do as you suggest @nedjohn and try to replicate my portfolio with similar but different ETF’s but I chose the Managed Portfolio option as I wanted the simplicity of someone else (more experienced!) managing it for me. Thanks for this suggestion though.