1) What exactly is 'same day` rule, there is much talk about it all over the internet but no one seems to be able to explain what it actually is or how it works.
Does it mean If I purchased shares in a company on day 1 and sold the same day at a loss, it is not applicable as a capital gains loss for the year unless I purchased on another day and implemented the B&B rule? Confused.
2) Using a recent example of B&B can I confirm that my understanding is correct by displaying the following calculation of a recent loss I made.
Action date stock price commission £Value Buy 04-04-2016 78656 0.0253 10.00 1990.00 Sell 05-04-2016 78656 £0.01425 5.00 1120.85 Buy 06-04-2016 93429 £0.027775 5.00 2594.99
My first assumption is that these sells/holdings all fall within 30 days thus the B&B rule applies, and to calculate my capital gains I have to apportion 78656 shares to the newest purchase, thus my latest purchase has more shares then the previous purchase so all those shares fall within my most recent purchase.
So I calculate:
78656 * 0.027775 = £2184.67 2184.67 - 1120.85 = £-1,063.82
So this shows I made a capital gains loss of -£1,063.82, does this appear correct?
Additional: A capital gains loss that I could only claim IF I kept this share 30+ days to make it a section 104 holding?
3) From the above example lets say down the road the stock goes up and I sell my holding before 30 days, but I do not enter this stock again for 31+ days I can treat it like a simple 104 holding as my earlier B&B shares where accounted for?
Action date stock price commission £Value Buy 04-04-2016 78656 0.0253 10.00 1990.00 Sell 05-04-2016 78656 £0.01425 5.00 1120.85 Buy 06-04-2016 93429 £0.027775 5.00 2594.99 Sell 09-04-2016 93429 £0.04 5.00 3737.16
3737.16 - 2594.99 = 1142.17 Gain 1142.17 - 1063.82 = 78.32 True Profit
Or is my understanding incorrect that I could only declare the Capital Gains Tax IF I sold more then 30 days after I bought the second round of shares?
4) Is it true that a share you may own if sold for a profit or loss before 30 days section 104 status counts as a normal taxable amount (salary taxation rules) that needs to be added to your yearly wage, and vice versa for any losses amounted in the financial year?
Making the assumption my above question is true and the B&B rule does not apply against non Section 104 holdings then perhaps this is closer to the case.
1st Jan Company ABC - BUY 1000 stock - 5000 3rd Jan Company ABC - SOLD 1000 stock - 10,000 4th Jan Company ABC - BUY 1000 stock - 20,000 5th Jan Company ABC - SOLD 1000 stock - 19,000 Profit/Loss - Purchase Price (10,000 + 19,000) - (5,000 + 20,000) = 4,000 Year Salary 20,000 + (4,000) Salary tax modified 24,000 / 0.2 = 4,800 tax payable.