What to do with losses?

Most of us are only-too aware that the FTSE is currently trading at its 2003 level.  If you want to go back further to a similar Index reading, then you are looking at nearly 13 years ago.

This being the case, there is a fair probability that you will have amongst your clients some longer-term investors who are nursing losses.

Now, if those losses are in the form of individual shares, unit-trusts or OEICS, then at least they might be useful as a CGT planning advice - are you exploiting opportunities to minimise CGT where this might be applicable?

Of course, if those assets are held within a Capital Investment Bond (CIB), it might seem less easy to extract some benefit from the downside of investment losses.  But all is not lost.

The relevant legislation (Part 4, Chapter 9, ITTOIA 2005) allows a degree of planning for what HMRC call "deficiencies" and "deficiency relief".  If there have previously been chargeable gains within a CIB, then it may be possible to use a "deficiency" resulting from a capital loss, by performing the usual sweep-up calculation upon full encashment of the CIB.  If this generates a negative figure then you may have a "deficiency", to the extent that it is covered by any previous chargeable gains.

Remember that if you have a bond currently sitting at a loss, the best policy may be to remain invested until it recovers to the point of zero chargeable gain - that way the appreciation in value is untaxed.