Posted by ursus on 27/November/2002 at 22:03:
1)Are CFDs subject to the same 30-day rule as shares?
No, because this was introduced only for shares and securities when pooling was abolished
2) Are CFDs subject to the same taper relief rules as shares? (This does assume you'd hold a position for unrealistically long time but thought I'd ask anyway!)
I think so, because tapering applies to gains on all chargeable assets (wd need to check legislation tho to be sure)
3) What is the effective date for CGT on short positions - the date you go short or the date you close? With shares I think it's always the selling date (even on naked shorts) but am not sure about this.
The date of the matching trade, as for shares. That is the consequence of this sect of the IR CGT manual on a quick read – cf category 7 covers shorting transactions:
For individuals and others within the charge to Capital Gains Tax on disposals of shares on or after 6 April 1998 TCGA92/106A TCGA 92 replaces the previous identification rules. For 1998-99 onwards, Section 106A provides that, for matching acquisitions and disposals of shares of the same class in the same company held in the same capacity· the identification rules set out below apply, even if the particular shares were identified in some other way when they were disposed of, or when they were transferred or delivered to the acquirer· earlier disposals must be matched with acquisitions before later disposals; any shares identified with an earlier disposal cannot therefore be identified with any later disposal· disposals must be identified in the following order.1) Against acquisitions on the same day, TCGA92/S105(1)(b), see CG50822.2) Against acquisitions within the 30 days following the disposal, TCGA92/S106A(5), see CG50566.3) Against acquisitions preceding the disposal, but after 5 April 1998, on a last in first out (LIFO) basis, TCGA92/S106A(6) , see CG50579.4) Against shares in a Section 104 holding, but without identifying any particular shares in that holding, TCGA92/S106A(6) and (7), see CG50590+.5) Against shares in a 1982 holding, but without identifying with any particular shares in that holding, TCGA92/S106A(6) and (7), see CG50870+.6) Against shares held on 6 April 1965, again on a LIFO basis, TCGA92/S106A(6), see CG50970+.7) Finally against acquisitions following the disposal (and not already identified under stage 2 above), taking the earliest acquisition first, TCGA92/S105(2).
4) Are any adjustments to CFD value in recognition of dividends treated as income or capital gain? I assume capital gain.
Not sure but assume cg because the cfd mechanism adjusts the price of the instrument to reflect the dividend.
5) If I trade a stock in CFD form and also trade the underlying stock, do I treat these as separate 'instruments'. I assume I do.
Yes, tho I have a hazy memory that there is some legislation that may touch on this (bec of wide statutory definitions of CFD) – apart from general anti avoidance legislation.
PS - I'm not an accountant or tax lawyer, so handle with care!
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