Tax management

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Covered Warrants

Covered Warrants by Alpesh Patel

Tax management

Another use of warrants is in managing your tax affairs. Oh dear. Whilst that is switch-off time for many, it can be worth the effort to stay awake.

If you have a capital loss on a share you could crystalise that by selling the stock to offset capital gains elsewhere and buy the call warrant to maintain exposure to the stock.

Other essentials the tax inclined should know: profits on warrants will be charged as capital gains not income. For longer term holders taper relief would be available. There is no stamp duty. They can't be part of an ISA, but can be part of a SIPP. Visit www.inlandrevenue.gov to find out more about more.