Capital Gains Tax and Dividends - Record Keeping

parker1982

Hi,

I've used up my ISA allowance (I used iWeb this year, have previous years with Fidelity) and so decided to invest additional money using a general investment account on a monthly basis using the Vanguard Investor platform.

I've read on this forum in the past that when investing in a general investment account to use the Income version of funds rather than Accumulation so made sure to select Income funds.

From reading this and other forums it seems common for people to have different general investment accounts with various platforms. It just had me wondering how people keep on top of what they've bough and sold to calculate CGT and dividends.  For example, do all of the main platforms provide an annual summary for CGT and dividend calculation purposes when using general investment accounts that would detail this?  As I've only ever invested using ISA's it's not something I've thought about previously.

Thanks

ColdIron

With a GIA your platform should supply an annual Consolidated Tax Certificate detailing income (dividends, overseas dividends, property income distributions, interest etc)

These usually don't deal with CGT. As this can span many years (and platforms) I maintain a spreadsheet with the key details lifted from my Contract Notes to record purchases and sales (dates, quantities, prices, transaction costs, stamp duty) to keep running totals and weighted average share/unit prices. I also keep copies of the tax certificates and contract notes

wmb194

Easy. For me, Microsoft Money 2005.

ChilliBob

wmb194 said:

Easy. For me, Microsoft Money 2005.

A slight hijack, but I'm looking into starting much more rigrous record keeping for similar reasons to the initial poster, I was just going to use Excel or Google Sheets, what does Money 2005 give on top of those? Cheers

bowlhead99

ChilliBob said:

wmb194 said:

Easy. For me, Microsoft Money 2005.

A slight hijack, but I'm looking into starting much more rigrous record keeping for similar reasons to the initial poster, I was just going to use Excel or Google Sheets, what does Money 2005 give on top of those? Cheers

Money and other bits of personal finance software are essentially databases in which you track your information and record transactions and can get some standard reports out.

Excel or Google Sheets are a blank slate - a load of empty cells into which you could put whatever data points you fancy, and on which you could do whatever customised calculations you like, and build your own reporting from scratch.

If you want to be able to track a lot of raw data for personalised performance reporting and calculate or project the tax consequences of your activity - taking account of any possible changes that may be made to tax rates, allowances, transactions matching rules, indexation, etc - and if you're competent with spreadsheets, then a spreadsheet would always allow you to do what you need. Because it's a clean slate to build whatever you want: applying whatever calculations you want, to whatever data you want. When building something for your own personal recordkeeping you're unlikely to bother building little dialog boxes and using vba to create an attractive 'front end'. You'll just record your transactions in lists and when doing that, apply some logic to group things together to feed your calculations, and you may have all the info you need right there in the calculations without bothering to generate some pretty 'report'.

What personal finance software offers is that someone has already done the thinking about where to store the info and how to capture it and what reports might be wanted to give basic answers which will be 'good enough' for many customers, or at least be a good stepping stone to taking those answers and doing a bit more maths for a final outcome. But if you're happy with spreadsheets and the kind of person that wants to control exactly what happens to their data all the way through a calculation to understand where the answer comes from, there's obviously more 'potential' in just building something yourself, as you can easily perform side calculations and what-ifs as you go along. 

With a spreadsheet - aside from recording the fine detail of every contract note and income distribution (or deemed distribution) you ever received  - you could literally build your own full tax return calculation with all the logic to figure out where you are against the income tax bands and allowances and what rates of tax (or blends of multiple rates of tax) you would pay on an incremental dividend of £x or capital gain of £y.   Whereas other people would not be trying to do all that, and if you don't have much going on in your taxable investment accounts there is no need to try to 'reinvent the wheel' using a fancy spreadsheet. 

For many people if they had to do a personal tax return they would just go back through their transaction history from their broker statements (or Money database, or wherever they safely store the records of what they've done over the years) and find out how much they paid for the 1000 shares of A plc that they just sold for £z, and stick it all on a working to submit with their online tax return, and the tax return would tell them how much they owed. No 'reports' or fancy calculations or spreadsheet trickery needed. 

Personally I'm a spreadsheet guy because generally the investment modules of personal finance software or online portfolio monitoring tools are likely to be missing at least one metric that I'd like to track, and it would be a pain to put everything in a commercial software database for 95% of the answer and then still have to extract and put all the same information in a personally-constructed spreadsheet to get the other 5%.

ColdIron

Welcome back BH

Linton

ChilliBob said:

wmb194 said:

Easy. For me, Microsoft Money 2005.

A slight hijack, but I'm looking into starting much more rigrous record keeping for similar reasons to the initial poster, I was just going to use Excel or Google Sheets, what does Money 2005 give on top of those? Cheers

MS Money provides 3 key features....
1) It integrates investment management, cash account management and planning for the future
2) There is a very wide range of reports that can be generated - eg performance of sets of investments over any time period, spending by category and time, tax transactions, etc etc.  The reports can be exported as spreadsheets to form the basis of more complex analysis.
3) Import and classify bank account transactions and upload fund and share prices.

So every morning it just takes me a few minutes to upload the latest investment prices and run my retirement plan which will tell me how much I can afford to spend  each year until my mid-90s.  Similarly once a week it's a few minutes work to upload all my bank transactions for the previous week, classify them,  and check the monthly income and spending report to ensure that both are progressing as planned.

If I wish I can easily go back 20 years and investigate down to the level of individual transactions how my spending and income have changed over time.  This for example gives useful insight into the effects of inflation.

Of course you could in theory develop you own excel system that did something similar but it would be a massive piece of work and I am not sure that Excel could effectively operate on the many thousands of separate data items involved.

TBC15

Someone posted a link to download Money 2005 quite recently.

lindabea

When it comes to calculating the gains from selling (a fund) for CGT purposes, can someone please confirm if my understanding is correct?  I currently hold some  units in VLS income, so, if I bought units at different times and therefore different prices, I would take the weighted average unit price X number of units sold.  This gives me the acquisition value; if I then work out the sales value by multiplying the current selling price by the number of units sold and subtract the acquisition value, I would end up with the gain/loss of the sale transaction.    But how do I work out any transaction costs and stamp duty associated with the buying and selling of the units.   I haven't seen any of these costs shown on any Vanguard contract note. 

ColdIron

lindabea said:

But how do I work out any transaction costs and stamp duty associated with the buying and selling of the units.   I haven't seen any of these costs shown on any Vanguard contract note.

That's because Vanguard Investor do not charge to buy or sell funds so there are no transaction costs and stamp duty does not apply to funds

lindabea

ColdIron said:

lindabea said:

But how do I work out any transaction costs and stamp duty associated with the buying and selling of the units.   I haven't seen any of these costs shown on any Vanguard contract note.

That's because Vanguard Investor do not charge to buy or sell funds so there are no transaction costs and stamp duty does not apply to funds

That's great to know - it keeps things simple.  So, have I described the gain/loss calculation correctly in my previous post?