CGT calculation for funds transferred

flopsy1973

thanks  I did check they are ACC units and i have never bought additional units ? so at least there is no CGT on this holding

eskbanker

flopsy1973 said:

thanks  I did check they are ACC units and i have never bought additional units ? so at least there is no CGT on this holding

There wouldn't be any CGT payable when realising sale proceeds of less than the annual allowance (which obviously means gains of even less), but in your shoes I'd still be keen to understand how you ended up with more units than you started with if you didn't buy any and didn't have any dividends to reinvest - what fund is it and when did you initially inherit?  Also worth considering whether now is the right time to sell....

flopsy1973

its the invesco high income uk fund sorry after going back through accounts further i can see where the bulk of the extra units now came from. But there have still been small increases to the amounts of units before this extra was added I presumed from the dividends buying extra units??
yes maybe will have to hold off selling until it bounces back up again not desperate to sell just tidying a messy PF
thanks for your help

coyrls

Dividends do not buy extra units in an accumulation fund.

eskbanker

flopsy1973 said:

its the invesco high income uk fund sorry after going back through accounts further i can see where the bulk of the extra units now came from. But there have still been small increases to the amounts of units before this extra was added I presumed from the dividends buying extra units??

When it comes to dealing with HMRC, or any other government agency, it's best not to presume, when you have a legal obligation to make accurate declarations.  Acc funds automatically reinvest dividends without increasing the number of units held, so if it's an acc fund then dividends won't generate extra units, i.e. you should dig deeper to get to the bottom of what's actually happened, especially if it wasn't clear to you how you acquired the bulk of the extra units - what was the story there by the way?

flopsy1973

in May 2014 transfer value of 6720 of 987 units was made into my account
In May 2015 my account had cost of 6762 and units 992 see below

this was under my transactions for that account and i remember choosing to buy extra units rather than have dividend if that makes sense ?
The mistake i made originally some of the units were transferred to my mother and when she passed away that also came partly to me

coyrls

There are no dividends from accumulation funds.  The extract shows "Loyalty Re-investment" of £29.66, not dividend reinvestment.  I think a loyalty re-investment dates back to when platforms offered a discount on fund charges and applied the discount by buying additional units.  I think the term loyalty reinvestment was use by Hargreaves Lansdown but it may have been used by other platforms.

eskbanker

flopsy1973 said:

in May 2014 transfer value of 6720 of 987 units was made into my account
In May 2015 my account had cost of 6762 and units 992 see below

this was under my transactions for that account and i remember choosing to buy extra units rather than have dividend if that makes sense ?
The mistake i made originally some of the units were transferred to my mother and when she passed away that also came partly to me

I imagine that @coyrls has hit the nail on the head with the small incremental purchases, i.e. they're reinvestments of platform rebates rather than dividends, but a confusing final sentence and an over-cropped image that has no apparent correlation with the figures you're mentioning still don't seem to explain the rest of what happened in between inheriting 987 units and ending up with 1538, or are you perhaps trying to convey that you inherited two separate pots at different times (and presumably different values)?

flopsy1973

Yes nail on the head thank you. 
So to be clear in acc units how are dividends treated as opposed to I come units 

eskbanker

flopsy1973 said:

Yes nail on the head thank you. 
So to be clear in acc units how are dividends treated as opposed to I come units 

With acc units, the dividends increase the value of each unit, whereas if you reinvest dividends issued by inc units, you're buying more units but without their value increasing.

Say you had 100 acc units of a fund valued at £1 each, and another 100 inc units of the same underlying fund, also valued at £1 each, and dividends equivalent to 5% were generated.

The acc units would increase in value to £1.05, so your 100 units @ £1.05 would now be worth £105.

The inc units would generate £5 of income, so if you reinvested that, you'd have 105 units @ £1, i.e. the same £105. but structured differently.

That's oversimplifying in a variety of ways but hopefully illustrates the key difference....