Non-UK domiciled funds outside tax wrapper

aroominyork

The only fund I hold outside a tax wrapper is HSBC FTSE All-World Index (Class C, Inc.). To use this year's CGT allowance I want to sell it (the capital gain on my entire holding is, conveniently, just under £6000) and buy Fundsmith Sustainable Equity in its place. At the same time I would sell my tax-wrapped Fundsmith Sustainable and replace it with HSBC index fund. However Fundsmith Sustainable is domiciled in Luxembourg. Does this make any difference to future tax liabilities or how I report the holding on my self-assessment? If necessary I could buy Fundsmith Equity instead since it is GB domiciled, but I'd rather have the Sustainable version.

masonic

Dividends would be considered foreign, but you wouldn't need to add the foreign income pages to your return if your foreign dividends were less than £2000. Just include them in box 6 rather than box 4.

aroominyork

So based on the historic yield of 0.2% I would need a holding of £1m before it makes any difference. OK, I think I am safe there.

ColdIron

Does excess reportable income apply to non UK domiciled OEICS?

You could of course substitute it for an equivalent or close equivalent tracker of convenience for the requisite 30 days

masonic

OIECs should distribute all of their income, but an offshore fund may not adhere to the same rules. I'm actually struggling to find the Luxembourg domiciled fund to check what type it is. All I could come up with were GB00BK5MT475 and GB00BK5MT582.

aroominyork

ColdIron said:

You could of course substitute it for an equivalent or close equivalent tracker of convenience for the requisite 30 days

True, but every time I am out of the market, even for a day, the markets conspire to cost me a few fundred quid. Only once do I remember it working in my favour. But if I can find an equivalent to the HSBC fund which I would be happy to stick with beyond 30 days it would mean half the amount was out of the market for that day (since the wrapped FS would stay put).

masonic

According to the Fundsmith website, there are actually 4 UK domiciled securities for Fundsmith Sustainable Equity Fund (T and I class, Acc and Inc), so could you switch to one of these?

aroominyork

masonic said:

OIECs should distribute all of their income, but an offshore fund may not adhere to the same rules. I'm actually struggling to find the Luxembourg domiciled fund to check what type it is. All I could come up with were GB00BK5MT475 and GB00BK5MT582.

I took the info from the FT which gives LU2289280971 but you are right, there is a GB version. I didn't realise there were so many choices!

aroominyork

aroominyork said:

ColdIron said:

You could of course substitute it for an equivalent or close equivalent tracker of convenience for the requisite 30 days

True, but every time I am out of the market, even for a day, the markets conspire to cost me a few fundred quid. Only once do I remember it working in my favour. But if I can find an equivalent to the HSBC fund which I would be happy to stick with beyond 30 days it would mean half the amount was out of the market for that day (since the wrapped FS would stay put).

30 days in VWRL looks a good option. Spread is only 0.02%%. Just so I understand details of the 30 rule, is it based on valuation points or full days, eg buy the replacement ETF at 3pm on 1st of the month, then sell it at 10am on 31st. Would that contravene?

ColdIron

VWRL tracks the same index so would be a good choice. However if your platform charges for ETFs (twice) and not funds you could shave a few quid off the exercise with something like Fidelity Index World that tracks the developed world, it's close enough for 30 days

I don't think HMRC work in hours. Exactly when you buy and sell the intermediary ETF is neither here nor there. It's the sale and repurchase of the original investment that matters when determining whether it's a disposal for CGT purposes

The matching rules refer to:

• Shares acquired in the 30 days following the day of disposal

My interpretation (and that's all it is) would be that a sale on the 1st and a repurchase on the 31st would be within 30 days, the 2nd to the 31st, and therefore not qualify for the exemption allowance . For peace of mind I would wait another day. Perhaps others might like to opine

aroominyork

I'm on Interactive Investor, so same cost for trading (I think) and fixed fees for holding. An ETF also means I'll be out of the market for less time than an OEIC, over a day less if I time it right. And I agree about waiting the extra day - I would've done that anyway but was just curious on a windy Saturday night. Many thanks ColdIron - that's been very helpful.