Details on Contract Note

ColdIron

DavidAC said:

Being an accumulation account do the dividends that it automatically reinvests need to be declared,

Yes but you may not have to pay tax if they are within your annual 'allowances'. £2,000 last year and £1,000 this year

or is this declared as part of the capital gain/loss?

No, dividends are income not capital gains

GeoffTF

eskbanker said:

GeoffTF said:

HMRC will have the contract notes. You are responsible for knowing all the rules and calculating your own capital gains. If you are unable to do that, you need to hire an accountant. HMRC periodically checks tax returns and takes action against the tax payer if they are incorrect.

No doubt HMRC will be able to obtain relevant data from platforms in the event of an investigation, but I wouldn't have thought that they'd have an archive of all historical contract notes to the extent of being able to validate any individual's CGT calculations, routinely as opposed to a one-off exercise, but happy to be corrected?

Apparently, HMRC has two databases, an older one and newer one, that record all this information. They check CGT calculations if they have reason to be suspicious. They also check a random sample of them.

GeoffTF

DavidAC said:

Being an accumulation account do the dividends that it automatically reinvests need to be declared, or is this declared as part of the capital gain/loss?

Dividends have to be declared as income in the tax years for which they occur. You can also add them to your capital gains base cost. It is more complicated if the fund is domiciled in Ireland (a majority of the Vanguard funds are):

https://www.vanguardinvestor.co.uk/investing-explained/general-account-tax-information

As has been mentioned, you also need to account for Equalisation, if your fund is an OEIC or Unit Trust.

ColdIron

GeoffTF said:

DavidAC said:

Being an accumulation account do the dividends that it automatically reinvests need to be declared, or is this declared as part of the capital gain/loss?

As has been mentioned, you also need to account for Equalisation, if your fund is an OEIC or unit Trust.

Not if the funds are Acc as they are retained. You will for Inc funds as the return of capital will alter your book cost for CGT purposes

wmb194

GeoffTF said:

eskbanker said:

GeoffTF said:

HMRC will have the contract notes. You are responsible for knowing all the rules and calculating your own capital gains. If you are unable to do that, you need to hire an accountant. HMRC periodically checks tax returns and takes action against the tax payer if they are incorrect.

No doubt HMRC will be able to obtain relevant data from platforms in the event of an investigation, but I wouldn't have thought that they'd have an archive of all historical contract notes to the extent of being able to validate any individual's CGT calculations, routinely as opposed to a one-off exercise, but happy to be corrected?

Apparently, HMRC has two databases, an older one and newer one, that record all this information. They check CGT calculations if they have reason to be suspicious. They also check a random sample of them.

Yes, these days, in theory, since MIFID II it should be quite easy to collect a lot of these data using the National Client Identifier (NCI)* that is meant to accompany every trade (including OEICs) but as usual the problem will be how and when the data are reported or reported at all by all the various players involved. I wonder whether HMRC has the data from my US based broker or does it just collect every trade on US stock exchanges that it can search for me on my NIC?

When it's coming from the LSE and other trading venues I'd presume reported data won't include trading commissions and possibly whether or not stamp duty was paid. Sometimes firms switch from being domiciled offshore (no stamp duty due) to onshore e.g., Phoenix (LSE:PHNX) so for older holdings it wouldn't be 100% safe just to assume by how it's treated today.

Either way, the 'new' database is probably quite easy to search and would give a view.

*For British nationals usually your NI number.

https://www.kaizenreporting.com/camels-horses-problem-identifiers-mifid-ii/

https://helpcentre.trading212.com/hc/en-us/articles/360019312877-What-is-the-National-Client-Identifier-NCI-

 

eskbanker

My suspicion remains that such a dataset is highly unlikely to be complete, especially given the number of decades worth of historical data (prior to its creation) it would need to store in order to be reliable, even without complications from the likes of other jurisdictions.

I suppose it should be possible to submit a subject access request to HMRC to ascertain what data they hold about share purchases for a given individual - the subject of how to derive a figure to use for CGT calculations for old shares with insufficient retained documentation comes up from time to time, but if the right answer is held by HMRC, they ought to disclose it on request....

GeoffTF

I do not know how HMRC gets its data, but I was quoting from a professional tax adviser that I know. The message is that HMRC is likely to check our CGT calculations, sooner or later. I have never had an issue raised, but she said that issues are often raised with her wealthy clients. (I did not ask how much dosh you need to be wealthy nowadays.)

DavidAC

The only fund I have in my general account is VLS80 accumulation. The most I have had in it is about £32K, now down to about 18K after selling some at a loss this tax year. The yield is about 2%, so well under the £1K dividend allowance. I am still 2.25% down. I should have no tax to pay, it is just how to get accurate figures if the Inland Revenue asks for them. I will look at the link GeoffTF posted, thank you.

GeoffTF

DavidAC said:

The only fund I have in my general account is VLS80 accumulation. The most I have had in it is about £32K, now down to about 18K after selling some at a loss this tax year. The yield is about 2%, so well under the £1K dividend allowance. I am still 2.25% down. I should have no tax to pay, it is just how to get accurate figures if the Inland Revenue asks for them. I will look at the link GeoffTF posted, thank you.

VLS80 is UK domiciled. If the capital gain is below the allowance, you should get off Scot free. Be careful in future!

DavidAC

I would have been rather gutted if I had to pay tax on an investment that I have only ever lost money on. I saw inflation coming and thought I would try investing when the market was rising rapidly when the world was getting past Covid. Then Russia invaded Ukraine and it nose dived. Not the best time to have started investing.