SONIA (GBP) funds/ETFs

C_Mababejive

Thanks all

Another  question.... The RL fund pays divis twice a year, i suppose you could therefore think of it as a 6 month notice account as if you dont pass each 6 month ex divi date then you dont get any distribution at all ?

How does the Cash ETF distribute and how often ?

Thanks

dunstonh

Another  question.... The RL fund pays divis twice a year, i suppose you could therefore think of it as a 6 month notice account as if you dont pass each 6 month ex divi date then you dont get any distribution at all ?

The unit price goes up daily by the amount of interest received by the fund daily.   When the fund goes XD, the unit price drops by the amount of the distribution.  e.g. if the distribution is 1.7% then the fund price will drop 1.7%.      

If you sold the units the day before it went XD, the unit price would be higher than when you bought into the fund as you would retain the value accrued to date.

Stargunner

C_Mababejive said:

Thanks all

Another  question.... The RL fund pays divis twice a year, i suppose you could therefore think of it as a 6 month notice account as if you dont pass each 6 month ex divi date then you dont get any distribution at all ?

How does the Cash ETF distribute and how often ?

Thanks

RL also offer a Acc fund as well as the Inc one, so on the Acc fund divi's are not paid out. That is why the unit price of the Acc fund is higher than the Inc fund, because it doesn't drop on the ex divi dates.

CSH2 ETF doesn't pay out divis 

GazzaBloom

I'm with Aviva for my workplace pension and have access to their Aviva Pension MyM BlackRock Sterling Liquidity fund but they pay BOE base rate on cash held inside the pension less the 0.16% AMC fees for either the cash or MMF so not sure I see any reason to buy the MMF fund.

It's stated aim is "The aim of lower risk funds such as this fund is typically to provide growth at a similar level to bank and building society interest rates by investing in cash and cash alternatives"

Albermarle

GazzaBloom said:

I'm with Aviva for my workplace pension and have access to their Aviva Pension MyM BlackRock Sterling Liquidity fund but they pay BOE base rate on cash held inside the pension less the 0.16% AMC fees for either the cash or MMF so not sure I see any reason to buy the MMF fund.

It's stated aim is "The aim of lower risk funds such as this fund is typically to provide growth at a similar level to bank and building society interest rates by investing in cash and cash alternatives"

I think Aviva are being more generous than most on their cash account. 

andyhe

Outside of an ISA... if a personal savings allowance has been exhausted, are there any gotchas in selling a MMF before going ex-div then re-buying afterwards to avoid the dividend (which is classed as interest), and make use of a capital gains allowance?

GeoffTF

andyhe said:

Outside of an ISA... if a personal savings allowance has been exhausted, are there any gotchas in selling a MMF before going ex-div then re-buying afterwards to avoid the dividend (which is classed as interest), and make use of a capital gains allowance?

You have to take Equalisation into account. Nonetheless, you could gain a tax advantage. If you are doing it solely to gain a tax advantage that might be classed as Tax Avoidance, which is illegal.

andyhe

Thanks, fair point about intent.

On your point about equalisation though, isn't that to do with how the first distribution is treated? And by not holding to ex-div date there isn't a distribution to consider.

eskbanker

GeoffTF said:
Tax Avoidance, which is illegal

Tax evasion is illegal, but avoidance typically isn't:

Tax avoidance is to be distinguished from tax evasion, where someone acts against the law. By contrast tax avoidance is compliant with the law, though aggressive or abusive avoidance, as opposed to simple tax planning, will seek to comply with the letter of the law, but to subvert its purpose.

https://commonslibrary.parliament.uk/research-briefings/cbp-7948/

GeoffTF

eskbanker said:

GeoffTF said:
Tax Avoidance, which is illegal

Tax evasion is illegal, but avoidance typically isn't:

Tax avoidance is to be distinguished from tax evasion, where someone acts against the law. By contrast tax avoidance is compliant with the law, though aggressive or abusive avoidance, as opposed to simple tax planning, will seek to comply with the letter of the law, but to subvert its purpose.

https://commonslibrary.parliament.uk/research-briefings/cbp-7948/

That is no longer true. Here is the HMRC introduction:

https://www.gov.uk/guidance/tax-avoidance-an-introduction

"What tax avoidance is

Tax avoidance involves bending the rules of the tax system to try to gain a tax advantage that Parliament never intended.

It often involves contrived, artificial transactions that serve little or no purpose other than to produce this advantage. It involves operating within the letter, but not the spirit, of the law.

Most tax avoidance schemes simply do not work, and those who use them may end up having to pay much more than the tax they tried to avoid, including penalties."

It is best to take professional advice before undertaking tax saving wheezes that were not intended by Parliament.