Undeclared dividends

beeza650

I've had £2kish worth of IBM shares for 20+ years.  Dividends are re-invested. I wrongly assumed because of that there's no need to declare them on Self Assessment Tax Return. More recently 3ish years ago I invested £20k with MoneyFarm and very recently a big sump in two funds through IWEB.
Now there's no way previous dividends have exceeded more than a couple of hundred quid a year so nothing's owed to HMRC. I'm wondering what to do...explain my mistake to HMRC?
I read another thread that explained how reinvested dividends are essentially added to cost price when working out CGT and I'll do it "right" from now on in..the only person losing our from me not trying to correct it is me as (hopefully) my investments will do well enough for CGT to become a concern.
On another note...I can't find a good thread that explains the nuances of being cashed out of a fund for 30 days in order for it to count as a capital gain...anyone got any pointers please?

Dazed_and_C0nfused

Now there's no way previous dividends have exceeded more than a couple of hundred quid a year so nothing's owed to HMRC

If any of the following are relevant to you for any of the years in question then there could easily be additional tax due,

Married Couple's Allowance 

High Income Child Benefit Charge 

Adjusted net income greater than £100k 

Marriage Allowance

Thrugelmir

beeza650 said:

On another note...I can't find a good thread that explains the nuances of being cashed out of a fund for 30 days in order for it to count as a capital gain...anyone got any pointers please?

What are you trying to achieve?  

beeza650

Dazed_and_C0nfused said:

Now there's no way previous dividends have exceeded more than a couple of hundred quid a year so nothing's owed to HMRC

If any of the following are relevant to you for any of the years in question then there could easily be additional tax due,

Married Couple's Allowance 

High Income Child Benefit Charge 

Adjusted net income greater than £100k 

Marriage Allowance

No none of those apply.

beeza650

Thrugelmir said:

beeza650 said:

On another note...I can't find a good thread that explains the nuances of being cashed out of a fund for 30 days in order for it to count as a capital gain...anyone got any pointers please?

What are you trying to achieve?  

To 'use up' my £12,300 capital gains allowance each year. Rather than sell after 10 years let's say and end up with a big CGT bill.

MDMD

beeza650 said:

Thrugelmir said:

beeza650 said:

On another note...I can't find a good thread that explains the nuances of being cashed out of a fund for 30 days in order for it to count as a capital gain...anyone got any pointers please?

What are you trying to achieve?  

To 'use up' my £12,300 capital gains allowance each year. Rather than sell after 10 years let's say and end up with a big CGT bill.

There Is a thread here:

https://forums.moneysavingexpert.com/discussion/comment/76930329#Comment_76930329

NottinghamKnight

beeza650 said:

Thrugelmir said:

beeza650 said:

On another note...I can't find a good thread that explains the nuances of being cashed out of a fund for 30 days in order for it to count as a capital gain...anyone got any pointers please?

What are you trying to achieve?  

To 'use up' my £12,300 capital gains allowance each year. Rather than sell after 10 years let's say and end up with a big CGT bill.

Easiest option might be to sell he correct amount to use up the cgt allowance and then reinvest in a similar fund. 

beeza650

MDMD said:

There Is a thread here:

https://forums.moneysavingexpert.com/discussion/comment/76930329#Comment_76930329

Thanks but that seems to be about losses though

beeza650

NottinghamKnight said:

Easiest option might be to sell he correct amount to use up the cgt allowance and then reinvest in a similar fund. 

Yes, that's what I was thinking. But are there any nuances I need to be aware of? I've got money in two similar funds - switching money back and forth between the two of them is going to look a bit weird to HMRC no?
I've found this thread https://forums.moneysavingexpert.com/discussion/comment/77590634#Comment_77590634 so whilst it's obvious buying the exact same thing is not allowed - just how different does is it have to be? Could I go from Vanguard Lifestategy 80 to Vanguard Lifestategy 60 for example?

bowlhead99

beeza650 said:

NottinghamKnight said:

Easiest option might be to sell he correct amount to use up the cgt allowance and then reinvest in a similar fund. 

Yes, that's what I was thinking. But are there any nuances I need to be aware of? I've got money in two similar funds - switching money back and forth between the two of them is going to look a bit weird to HMRC no?
I've found this thread https://forums.moneysavingexpert.com/discussion/comment/77590634#Comment_77590634 so whilst it's obvious buying the exact same thing is not allowed - just how different does is it have to be? Could I go from Vanguard Lifestategy 80 to Vanguard Lifestategy 60 for example?

If you are selling or redeeming a position in one company or fund and buying another and want the sale to count as a disposal, what you purchase with the proceeds can be be anything that - as you said - is not the 'exact same thing', i.e. not exactly the same financial instrument.

A share of Vanguard Lifestrategy 80 is not the same financial instrument as a share of Vanguard Lifestrategy 60 - two funds with different holdings but similar strategies - so that's absolutely fine. Neither is HSBC Global Strategy Balanced the same as HSBC Global Strategy Dynamic, and a share of either of the HSBC funds could not be mistaken for being the same share in the same entity as either of the Vanguard funds, even though they will have many overlapping holdings.

For that matter, a share of Vanguard Lifestrategy 80 Accumulation class is not the same financial instrument as a share of Vanguard Lifestrategy 80 Income class; even though they are both shares of the same subfund within Vanguard LifeStrategy Funds ICVC, they are different classes and not capable of being confused as they represent different amounts of underlying assets; if the two types of shares in the fund were listed on a stock exchange they would not be under the same listing because one represents an ownership interest of £241-worth of assets and the other only £201.  So, HMRC will see them as different and you could achieve an exit for CGT purposes by selling out of one class and then re-buying the other without waiting for the 30-day period to expire. Just as I could sell some of my Lloyds Banking Group ordinary shares to buy more preference shares or vice versa.

However, it's feasible for a fund manager to switch or convert your Acc shares of a fund into Inc shares of the exact same fund and have it considered as a simple reorganisation of the subfund's capital, so if you give an order to dump the 80 Acc and buy the 80 Inc the investment platform may just arrange for the fund manager to switch the two holdings - with all your new Inc shares inheriting the acquisition cost of your previous Acc shares, and you wouldn't have achieved a 'disposal' for CGT purposes as you'd intended.

So if your plan was to exit but then go back to holding the same fund (e.g. V LS80 Acc to V LS80 Inc) you would be safer to sell out to cash first and then subscribe back in to the other class with that fresh money;  or perhaps sell, buy an HSBC fund for a day, and then sell that and buy back the Vanguard;  so that it's clear the fund manager has not literally converted your old shares into some new ones. Such faffing around to demonstrate that you had a 'clean break' and really did achieve a disposal of your original holding, can result in being out of the market (or in a different product) for a day or more, which may cost a fraction of a percent or even several percent in volatile times, and may be unwelcome.  So most people looking to achieve a CGT exit of a holding would do as NottinghamKnight suggests and just buy a 'similar' fund for 30 days or more, rather than trying to stay in literally the same fund but a different class and prove to HMRC that they really did exit the fund honest guv.

beeza650

@bowlhead99 thanks very much for that. In my IWEB account, I have HSBC GLOBAL AM UK GLOBAL STRATEGY ADVENTUROUS  (HSJTB) and VANGUARD INV UK LT LIFESTRATEGY 80 PERC EQUITY  (VVLSRE) split pretty much equally. Now if I sell one to buy to the other and vice versa (i.e. a 'swap') then would that be classed proper sale for CGT?