Short terms trades of an asset that is also your long term hold

[TheFeg]

I have a long term holding of LINK which effectively means whenever I dispose of LINK, the profit is pretty much large as the sale itself, e.g. A £100 disposal of LINK is effectively £99 profit and therefore ~£20 CGT.

I also want to occasionally make shorter term trades in this same asset. For example, say I want to buy £1000 worth of LINK and then a week later dispose of them and get back £1100, making a profit of £100 and hopefully a tax impact of £20.

However, because of my long term hold, the cost basis for my £1000 short term trade averages out to be much less and the profit on my trade becomes closer to £1000, with a tax impact of £200.

Is this just how UK tax works and I’m better off just trading something else, or is Koinly failing to use some rule that would treat these differently?

Thanks!

[Joshua]

I have the same problem, I think it depends on your governments tax system, whether it is first in, first out rule. So I have just stopped short term trading on my long term assets.

[sraftery]

I have had a similar problem, due to not really understanding how CGT works.
If you sell some coins and then buy them back within 30 days, you do not have any CGT liability as long as you do not buy back more than you sold.

However, if you buy first, and then sell, I do not think there is any such exemption. I am not a tax expert, and a proper accountant should be able to advise you properly on this.

I was trapped by this when I bought ETH and after a few days I swapped them for EXRD, and incurred CGT as a result of the rise in ETH over a few days. If I had swapped my ETH on the SAME DAY as I had acquired them, there would have been no CGT problem, since in that case HMRC would have treated the ETH as just being part of buying EXRD. One lesson learnt!

As for your own situation, the fact is that the Treasury does not care what your long-term plan is, all it wants is to collect as much from you as it can.