Deputy statistics editor Mark Robinson replies:
"The 30-day repurchase rule still applies and there are other restrictions on tax relief made under TAAR (targeted anti-avoidance rule) legislation, but these are primarily aimed at tax avoidance schemes that exploit the creation and use of capital losses. Since 6 April 2008, all shares of the same class in the same company have been treated as forming a single asset, regardless of when they were originally acquired.
"Although there are various practices that effectively mimic 'bed and breakfast' trading, such as using contracts for difference (CFDs), Isas probably represent the simplest method of avoiding tax on your equity investments. Everyone enjoys an annual allowance of £7,200 for equity Isas, and £3,600 for cash Isas. It is possible to transfer the cash component into an equity Isa, although you cannot move the money back to a cash Isa at a later stage. You can keep cash in the equity Isa, but it must be for future investment and is not tax-free. Even though investments in Isas are free of capital gains tax (CGT), when you consider that the personal allowance for CGT stands at £9,600 it means there is no real tax advantage unless you are a top-rate tax payer, or you are going to make a significant capital gain on your equity investments.
"Incidentally, both cash and equity Isas are covered under the UK’s Financial Services Compensation Scheme."
For more on how to use CFDs, warrants and spread bets, see our free Investment Guide to short-term trading.
Mr Boon adds:
"It is really the 30 day rule which under present conditions seems unfair, even ridiculous.Several times recently I have fallen into the Stop Loss hole when a large investor sells but the price returns almost immediately to it's previous level and I am not allowed to re-buy promptly. I admit I simply do not have the brains or time to devote to exotics like CFDs and I suspect that many elderly pensioners like myself are in the same position.
The answer seems to be to enlarge our ISAs even though the we may not live long enough to use up this years losses on our plain vanilla trading. It is surely mad that straightforward investors pay stamp duty and are curbed whilst "gamblers" are given a free run. No wonder we are in such a mess!"
