Cannot get definite answer

franklytom

coyrls wrote: »

The prospectus says what is possible but it appears your platform doesn't offer the switch facility; they can only sell accumultation units and then buy income units. A switch would not be subject to CGT a sell followed by a buy would be subject to CGT.

Yet the prospectus states that the non-taxable switching process is a sell followed by a buy.

"A switch involves the redemption of the Original Shares and the purchase of the New Shares. The number of New Shares issued will be determined by reference to the respective purchase prices of New Shares and redemption prices of Original Shares established with reference to the Valuation Point applicable when the Original Shares are redeemed and the New Shares are issued.
Shareholders subject to U.K. tax should note that a conversion or switch of Shares within the same Fund will generally not be treated as a disposal for the purposes of capital gains taxation."

There seems to be uncertainty and/or contraditions.

Are we saying that a sale and subsequent purchase with the proceeds is by definition a transaction that is precluded from being a non-CGT event? If so then how can the prospectus and Vanguard platform state that the above sell and buy switch process is not generally treated as a disposal for CGT?

coyrls

franklytom wrote: »

Yet the prospectus states that the non-taxable switching process is a sell followed by a buy.

"A switch involves the redemption of the Original Shares and the purchase of the New Shares. The number of New Shares issued will be determined by reference to the respective purchase prices of New Shares and redemption prices of Original Shares established with reference to the Valuation Point applicable when the Original Shares are redeemed and the New Shares are issued.
Shareholders subject to U.K. tax should note that a conversion or switch of Shares within the same Fund will generally not be treated as a disposal for the purposes of capital gains taxation."

There seems to be uncertainty and/or contraditions.

Are we saying that a sale and subsequent purchase with the proceeds is by definition a transaction that is precluded from being a non-CGT event? If so then how can the prospectus and Vanguard platform state that the above sell and buy switch process is not generally treated as a disposal for CGT?

The prospectus is a bit confusing but the point is, it's a redemption of shares followed by an issue of new shares at a single valuation point.

Looking at your description of the platform process, I think you need to establish if they are doing a switch as described above but that it will be documented as a buy and sell order, or if they are doing an actual sell followed by an actual buy. Note that a sell followed by a buy would not tend to be at a single valuation point.