SHOULD I SELL93 AIB SHARES TO AVOID PAYING CAPITAL GAINS?

I bought AIB shares in the summer sale and they have risen strongly from €4.40 to over €5 even after the losses due to the tracker scandal. I have been told that I should sell at least some of the shares to avoid capital gains tax. How does this work?

Everyone has an annual capital gains tax allowance of €1,270 per person. For jointly owned assets, the limit is twice that. But you must use it or lose it. To use it all, you must realise your capital gain by selling enough shares to ‘take’ a profit equivalent to €1,270. You won’t have to pay tax on that. Next year, you could do the same. You can buy the shares back after a month, but you’d have to take your chances on the price. But watch out for dealing fees, which can be pricey as one of our queries highlights.

I have shares with a stockbroker and I am not happy with the fees. It’s over €200 a year to maintain an account even before other fees and charges, which are 100s of euros more. If I switch to a cheaper broker can I transfer my share holdings to them? Which is cheapest? And what sort of service do they offer?

Yes you can switch holdings but there may be a fee for doing so. You could also wind down your portfolio by selling shares and buy them through the new broker. The cheapest are newbies De Giro. They are online specialists so you get a decent trading platform. There’s no hand-holding in terms of advice, the cheap deal is based on an executiononly service. However, they do provide a lot of info on the platform. You can even trade a limited number of Exchange Traded Funds for free. See www.degiro.ie for details.

I have done my selfassessment accounts. Should I have included a capital gain I made on AIB shares in the summer?

The deadline for paying and filing your online self assessment returns is November 16. It’s the end of November for CGT. But you use the same form, so send them in together.

My parents have a lot of old bank shares, including old AIB and Anglo Irish Bank. As these are worthless, can they use them to write off capital gains on other shares?

Yes for Anglo, but not for AIB shares, which still have value. A Revenue spokeswoman said: ‘A capital loss for CGT purposes arises on the disposal of an asset for a consideration less than its acquisition cost, or where an owner of an asset claims an asset has become negligible in value and Revenue accepts such a claim.’ You can offset a capital gain in the present or future against unused past capital losses.