Capital gains tax and 30 day rule.

Joey2013

Hi forum members, 
I posted a different capital gains tax question and received a reply from dales1. I wanted to thank dales1 and ask this 30 day question in the same discussion, but I can't seem to post there as keeps coming up as 'you are 9 characters too short ' or something similar. That is why I am asking about the 30 day rule in regards to capital gains tax in a new thread.
My question is can I sell my INCOME units in the HSBC FTSE ALL WORLD tracker fund and buy the ACCUMULATION units in the same tracker fund to avoid the 30 day rule, or do I have to buy a completely different fund such as FIDELITY INDEX WORLD. 

TIA for your replies.

ColdIron

but I can't seem to post there as keeps coming up as 'you are 9 characters too short ' or something similar.

That must have been a very short reply, the minimum post length is 10 chars so make your reply longer, add spaces if you like

The answer to your question is - probably. My understanding is that the rules do not explicitly say that you can or cannot but what they do say implies that you can (it is a different security with a different ISIN, different price etc). It seems to be common practice but to be absolutely certain somebody may have to challenge it in law to get HMRC to make a ruling

This question has come up before and generated much discussion (more heat than light). The late lamented bowlhead99 posted several lengthy posts (weren't they all ) which shed a lot of light on the subject and convinced me at least that you can

I will try and find some if this thread generates too much heat

kuratowski

ColdIron said:

That must have been a very short reply, the minimum post length is 10 chars so make your reply longer, add spaces if you like

I don't think the forum software counts characters within a quote block as part of the minimum.  So if your reply somehow got caught up in a quote, this could prevent you from posting.

ColdIron

Good point. OP, you should reply below the quoted post and not within the quoted post

dales1

Here is bowlhead's post https://forums.moneysavingexpert.com/discussion/5860818/accumulation-and-income-funds-cgt

His relevant paragraph is three from bottom.

So it does seem clear that , in his esteemed opinion, Income and Accumulation are different products, create a CGT event, and do avoid the 30 day rule.

And above bowlhead's piece, you can see ColdIron's contribution, which gives links to 2 more supportive bowlhead pieces.

EdSwippet

ColdIron said:

but I can't seem to post there as keeps coming up as 'you are 9 characters too short ' or something similar.

The answer to your question is - probably. My understanding is that the rules do not explicitly say that you can or cannot but what they do say implies that you can (it is a different security with a different ISIN, different price etc). It seems to be common practice but to be absolutely certain somebody may have to challenge it in law to get HMRC to make a ruling.

I used to be doubtful too, but these day I feel fairly confident. The section 104 pool definition in the Taxation of Chargeable Gains Act 1992 says this:

104 Share pooling: general interpretative provisions.

(1) Any number of securities of the same class acquired by the same person in the same capacity shall for the purposes of this Act [F1(subject to express provision to the contrary)] be regarded as indistinguishable parts of a single asset growing or diminishing on the occasions on which additional securities of the same class are acquired or some of the securities of that class are disposed of.

Now, the prospectus for the funds in question. For example, HSBC Index Tracker Investment Funds:

Share Classes

The Company may issue several Share Classes in respect of each Fund being Retail Income, Retail Accumulation, Income C, Accumulation C, Institutional A Income, Institutional A Accumulation, Income S, Accumulation S, Income T, Accumulation T, Institutional Income and Institutional Accumulation.

The Share Classes currently in issue are Retail Income, Retail Accumulation, Income C, Accumulation C, Income S, Accumulation S, Accumulation T, Institutional Income and Institutional Accumulation.

To me it seems clear that for HSBC funds at least, accumulation and income units are different share classes, and so would be different section 104 pools. I'd bet real money that the same is true for other fund providers (too lazy to check!).

EthicsGradient

I asked the question on the HMRC forum: https://community.hmrc.gov.uk/customerforums/cgt/d8d535b0-774f-ec11-a3ee-00155d974e91

Their reply (without saying what this would mean for my hypothetical example - I think they always make sure to avoid giving answers to examples) was:

"OEICs can issue shares of a number of different classes. These include income shares, net or gross accumulation shares and currency shares, . These should be treated as different classes of unit. See link: CG57755 - OEICs: shareholders: shares: classes  ."

Joey2013

Apologies about the delay in replying to all the comments. Thank you Coldiron, Kuratowski, dales1, EdSwippet, and EthicsGradient.  I am not very good with this technology lark and managed to get stuck in the quote section and then couldn't get out in the other thread.
So for this 30 day rule question as I understand it from all your replies, it is possible to avoid the 30 day rule by swapping from INCOME units to ACCUMULATION units but HMRC haven't yet made an explicit ruling on this.

Thank You all again for your contributions.