CGT on transfer of Funds from HL

pip895

I believe transfer of funds from Dirty to Clean versions does not represent a disposal for CGT purposes.

Does anyone know if you could sell a "dirty" fund in HL transfer the cash - to say Charles Stanley and then repurchase as a clean version without it being counted as a disposal? I seem to remember some rule about it not counting if it is repurchased within 1 month.

SnowMan

pip895 wrote: »

I believe transfer of funds from Dirty to Clean versions does not represent a disposal for CGT purposes.

Does anyone know if you could sell a "dirty" fund in HL transfer the cash - to say Charles Stanley and then repurchase as a clean version without it being counted as a disposal? I seem to remember some rule about it not counting if it is repurchased within 1 month.

My understanding is that is would be treated as a disposal for CGT purposes.

If you sold class A units in fund X from Hargreaves Lansdown and then purchased class A units in fund X with Charles Stanley within 30 days then it would not count as a disposal and your unrealised capital gain would transfer over to Charles Stanley (under the 30 day rule)

If you sold class A units in fund X from Hargreaves Lansdown and then purchased class B units in fund X with Charles Stanley within 30 days then it would count as a disposal and a realised capital gain.

Selling dirty with HL and buying clean with Charles Stanley comes under the latter of these two.

(note not to be confused with conversions and some switches that take place from class A to class B units of the same fund on a single platform that don't count as a disposal)

pip895

Hummm.. I suspect you may be right - its a shame - I guess I will probably have to wait for HL to transfer into a clean class and then transfer.
Are we defiantly sure that if it is the same class but on two different platforms then no CGT will become payable? It could get expensive if I get it wrong!

SnowMan

pip895 wrote: »

Hummm.. I suspect you may be right - its a shame - I guess I will probably have to wait for HL to transfer into a clean class and then transfer.
Are we defiantly sure that if it is the same class but on two different platforms then no CGT will become payable? It could get expensive if I get it wrong!

As sure as I can be (under the long established 30 day bed and breakfasting rule).

http://www.hmrc.gov.uk/cgt/shares/find-cost.htm

If you only buy back half the holding then half still counts as a disposal.

And assumes of course you don't have a separate secondary un-wrappered holding of the same class of units in the same fund on a different platform.

if you wait for clean class conversion you will probably be hit by the new HL £30 per account closure fee

gterr

Might just be worth sending a message to CSD to check, since their website says that, wherever they can, they will automatically change funds from dirty to clean on transfer in.
Also, of course, if funds are wrapped e.g. in an ISA the question of CGT doesn't arise (but I'm sure you knew that).

Biggles

SnowMan wrote: »

As sure as I can be (under the long established 30 day bed and breakfasting rule).

http://www.hmrc.gov.uk/cgt/shares/find-cost.htm

Neither that page nor http://www.hmrc.gov.uk/manuals/cgmanual/cg50566.htm seem to exclude shares that are sold outside an ISA and repurchased within one within 30 days. But I'm sure there is such an exclusion, I just can't track it down on their website.

Can you detect I'm clutching at straws here?
;-)

SnowMan

gterr wrote: »

Might just be worth sending a message to CSD to check, since their website says that, wherever they can, they will automatically change funds from dirty to clean on transfer in.

That would involve re-registration (in specie transfer) of the investment and conversion by Charles Stanley which is another option for pip895.

In that case there would be no disposal because it would effectively come under the conversion rules

dunstonh

For it to not be a chargeable event it has to be a switch or conversion. It cannot be a sell and buy.

SnowMan

Biggles wrote: »

Neither that page nor http://www.hmrc.gov.uk/manuals/cgmanual/cg50566.htm seem to exclude shares that are sold outside an ISA and repurchased within one within 30 days. But I'm sure there is such an exclusion, I just can't track it down on their website.

Can you detect I'm clutching at straws here?
;-)

If the same class of units in the same fund are bought back within an ISA wrapper on a different platform within 30 days then the sale of the un-wrappered holding on the old platform would count as a disposal for CGT purposes.

If the same class of units in the same fund are bought back un-wrappered on a different platform within 30 days then the sale of the un-wrappered holding on the old platform would not count as a disposal for CGT purposes under the bed and breakfasting rules.

SnowMan

dunstonh wrote: »

For it to not be a chargeable event it has to be a switch or conversion. It cannot be a sell and buy.

Some platforms like HL and Fidelity Fundsnetwork allow you to set up switches and the sale and buy back the next day takes place automatically without funds ever going back into the investor's cash account. I think it is clear that that is a switch from dirty to clean that doesn't count as a disposal.

However some platforms such as Youinvest and TD Direct don't seem to have such a switch facility. However they do allow you to do the rebuy once you have the contract note (i.e. before the settlement date). In effect you can buy back the next day in the same way as for the HL automatic switch. Do you know dunstonh whether a switch done dirty to clean that way would be treated as a disposal (i.e. is that treated as a switch or a sale and rebuy for CGT purposes?) or would you need to ask the platform that question?

dunstonh

However some platforms such as Youinvest and TD Direct don't seem to have such a switch facility. However they do allow you to do the rebuy once you have the contract note (i.e. before the settlement date). In effect you can buy back the next day in the same way as for the HL automatic switch. Do you know dunstonh whether a switch done dirty to clean that way would be treated as a disposal (i.e. is that treated as a switch or a sale and rebuy for CGT purposes?) or would you need to ask the platform that question?

The compliance guidance given to us and guidance from platforms was that it must be part of a switch transaction and must not be a sell and then buy (i.e. not two distinct transactions). If the platform does not offer switches then I would seek guidance from them.