CGT on transfer of Funds from HL

grey_gym_sock

oh, does a "switch" like really not count as a disposal? it is something you can do with 2 unrelated funds with different managers. i'd always assumed it was a sell transaction on 1 day, followed by a buy transaction on the following day.

SnowMan

grey_gym_sock wrote: »

oh, does a "switch" like really not count as a disposal? it is something you can do with 2 unrelated funds with different managers. i'd always assumed it was a sell transaction on 1 day, followed by a buy transaction on the following day.

If it is 2 unrelated funds then it is a disposal of course.

What we are talking about here is a switch between different classes of units in the same fund (for example HSBC FTSE all share retail class units to HSBC FTSE all share C class units) which isn't a disposal in the precise circumstances set out by dunstonh in post 11

The wording that dunston quoted ties in with the draft consultation to the new regulations, there is also a useful bit about how to deal with equalisation

B.4
Provided that the issue of the new units is to the same investor and is tied to the cancellation of the old units and made in exchange for those units, so that the transaction the investor undertakes is a single one, then this will be within the wording of this regulation.

B.5
It was also identified in the responses that this method of switching share classes could cause equalisation to arise to the investor on the issue of new units. Given that the purpose of this regulation is to treat the investor as having made neither a disposal nor an acquisition then it is not appropriate that equalisation should arise for tax purposes in such a case.

B.6
The Government has therefore provided that (where section s103F applies) then any part of the next distribution, or amount of reported income, that is paid out or reported as an equalisation amount in respect of the new holding of units (or converted units) shall be treated for the purposes of the participant’s tax, not as a repayment of capital, but as a distribution of income.

B.7
This means that it will be necessary to inform investors who had undertaken such a ‘switch’ or conversion that any equalisation that may be shown on their vouchers should be added to the distribution or reported income for tax purposes. It should not be treated as repayment of capital. HMRC will issue guidance as to how this can be dealt with in practice

Biggles

SnowMan wrote: »

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.

Yes, that was how I understood the situation to be with shares. But when it wasn't mentioned it the HMRC pages linked above, I suddenly started seeing a glimmer of hope (only to be dashed again)!