euro denominated all world etf

Aidanmc

I'm think of changing my existing euro fund investment to a euro all world etf.

My current holding history as i have a query regarding CGT,

Initial investment May 2017 10k euro Guinness Global Innovators fund EUR Acc, adding another 5K eur in April 2018.

This is invested directly through Guinness Asset Management

April 2019 I switched the Innovators fund to Guinness Global Equity Income Fund EUR Acc

The value at time of switch was 17,397 euro. First query is,

Would this gain of 2,397 euro needed to have been declared to revenue as Capital Gain?

Now i'm thinking of selling the Guinness Global equity fund, current value 30Keuro and investing the funds in a Euro denominated all world etf or a fund, Something like VWCE, FWRA,EUNL.

The Guinness fund has been underperforming recently and ocf for the fund is 0.77%

I was going to use a platform where i can deposit the funds in Euro currency without have to FX.

I dont know if all platforms support this, but i believe Trading 212 does.

Is there others where i can deposit in euro and funds remain in euro on the platform?

Regarding CGT on the approx 15k euro gain, i understand the CGT allowance is now only 3k.

So, 15k-3kCGT allowance = 12keur taxable gain, approx 2kGBP tax payable at 20%

Would this be an approx calculation?

If i only sold part of the Guinness fund, up to the CGT allowance the tax could be avoided?

Edit. Actually the CGT would be 10% as i'm basic rate taxpayer

I would really appreciate you thoughts.

EthicsGradient

For the switch in 2019, the gain would have been potentially subject to CGT - you sold one asset, and bought another. But then, the allowance for gains was £11,700 (2018-19) or £12,000 (2019-20), and you should have declared all your gains for the tax year to HMRC if you total gains exceeded that, or if the gross sale amounts added up to more than 4 times the allowance. So if you didn't sell other assets outside a tax shelter that tax year, then you're fine. And that resets your cost basis, ie it's now €17,397. If there were other sales with combined gains approaching £10,000, or a sale value approaching £30,000, then you ought to do a full calculation, including currency conversion. And then fess up to HMRC if necessary.

There are other platforms that allow you to hold foreign currency, eg ii. But ii, when you do want to exchange currencies, charges a hefty 1.5%, so for other purposes that may not be your best option.

Since the name is "Global Equity Income", but you have accumulation units, then there should have been accumulated income that was automatically reinvested into the fund (by increasing the accumulation price), and you can count that as a cost. Guinness should have told you each year how much that was. I've never had to do a capital gains calculation in another currency, however. I think, logically, you ought to convert each to pounds at the rate for that date, which means a lot more work. Something like:

Bought for €17,397 in April 2019 = (say) 17,397/1.16 = £14,997.34
accumulated income of €85.30 on 31/7/19 = 85.3/1.11 = £76.85
accumulated income of €170.00 on 31/12/19 = 170/1.17 = £145.30
accumulated income of €170.00 on 31/7/20 = 170/1.10 = £154.55
...
and so on. Then you add up all those pound amounts to get your total cost, including accumulation, since April 2019. It may turn out to be on the order of £16,500 (about 10% above the original £15,000, because of 5 years accumulation around 2%).

Work out the total value in pounds that you will sell it for (eg €30,000 = 30000/1.165=£25,751 right now), subtract the total cost (eg £16,500) and your gain might be £9,251. Then you take off £3,000, and multiply by 10% (assuming no other sales in this tax year).

Yes, you could sell just part of it this year, to keep the gain under £3000. That will probably need 4 tax years to do it all without paying any tax.

Aidanmc

@EthicsGradient, Thank you so much for your helpful reply.

Yeah, that was my only capital gain in that tax year i switched funds,

The income automatically reinvested into the fund is Excessive Reportable Income (ERI)

Below is a screenshot of the info Guinness provide every year.

Initially i wasn't aware of ERI and that it needed to be declared on self assessment as foreign income but i have been entering it on tax return in recent years. I just multiply the ERI income figure per unit x number of units and convert it to gbp   Its been around £300-£400 each year approx

So just to clarify, I can minus these income figures over the years from the capital gain?

EthicsGradient

Yes, if you're actually reporting to HMRC, the ERI each year would be listed as an extra cost. Then when you sell all (or some), that gives you the gain - and if it's some, you work it out per unit, to give you a new basis from then on.

So something like £15,000+£300+£330+£350+£370+£400=£16,750
total 1500 units
cost/unit=16750/1500=£11.17
price per unit now=£16.80
sell 500 units
gain=(16.80-11.17)*500=£2,815
remaining 1000 units acquired at £16.80*1000=£16,800

Aidanmc

EthicsGradient said:

Yes, if you're actually reporting to HMRC, the ERI each year would be listed as an extra cost. Then when you sell all (or some), that gives you the gain - and if it's some, you work it out per unit, to give you a new basis from then on.

So something like £15,000+£300+£330+£350+£370+£400=£16,750
total 1500 units
cost/unit=16750/1500=£11.17
price per unit now=£16.80
sell 500 units
gain=(16.80-11.17)*500=£2,815
remaining 1000 units acquired at £16.80*1000=£16,800

Thank you. I'm finding the partial disposal calc a little challenging to get my head around.

Continuing on from the above calculation, if i wanted to sell another 500 units in the following tax year and the value per unit then was £17.50 and another £250 ERI generated can you please show me an example calculation?

Also regarding the reporting period for this guinness fund which is by calendar year(maybe all funds are i dont really know) and the distribution date is 6 months later in June, if i were to sell or part sell after the reporting period but before the distribution date do i include that when calculating and declaring on tax return?

EthicsGradient

Aidanmc said:

EthicsGradient said:

Yes, if you're actually reporting to HMRC, the ERI each year would be listed as an extra cost. Then when you sell all (or some), that gives you the gain - and if it's some, you work it out per unit, to give you a new basis from then on.

So something like £15,000+£300+£330+£350+£370+£400=£16,750
total 1500 units
cost/unit=16750/1500=£11.17
price per unit now=£16.80
sell 500 units
gain=(16.80-11.17)*500=£2,815
remaining 1000 units acquired at £16.80*1000=£16,800

Thank you. I'm finding the partial disposal calc a little challenging to get my head around.

Continuing on from the above calculation, if i wanted to sell another 500 units in the following tax year and the value per unit then was £17.50 and another £250 ERI generated can you please show me an example calculation?

Also regarding the reporting period for this guinness fund which is by calendar year(maybe all funds are i dont really know) and the distribution date is 6 months later in June, if i were to sell or part sell after the reporting period but before the distribution date do i include that when calculating and declaring on tax return?

I've just realised I did that calculation very wrong. The last line should have read

remaining 1000 units acquired at £11.17*1000=£11,170 (it's the price it took to acquire them, not the latest price, that is you cost)

That would then mean that the calculation for the next time would be
acquisition cost = £11,170+£250= £11,420
cost/unit=£11.42
sell 500 units
gain=(17.50-11.42)*500=£3,040
remaining 500 units acquired at £11.42*500=£5,710

(so if you wanted to keep below the £3000 allowance, and thus not have to report the gain, you'd need to sell slightly under 500 units - 490 would be OK)

The reporting year does vary by fund (indeed, I've just had one change it, by one month, which means I'll get 2 sets of ERI in one year. Grrrr).

Selling between the end of the reporting period and the distribution date, 6 months later - good question. I think that, logically, you would include the share of the ERI that you sell as a cost for it, because consider an ETF that had no actual capital gain, but had some ERI: if you buy it for £10/unit in Jan 2023, and for the Jan-Dec 23 reporting period it gets 20p/unit ERI, then its market price should be  £10.20/unit. If you sell at that on Jan 1st 2024, you'd expect the CG calculation to come out with zero capital gain, which would have to be (10.20-(10+0.2)). You'd then declare the ERI as income on Jun 30th 2024.

But the thing with ERI is that it's often not published until after the distribution date. Which means you wouldn't be able to work out the exact capital gain until June 30th (or, for an ETF with reporting period ending March 31st, until September 30th). So I don't feel 100% certain that you'd include that 20p in the cost price of my example. I've never been able to find a definitive answer for this.

Aidanmc

@EthicsGradient

Thanks for that, i've got it now!

Just looking at that Guinness fund info there and it seems 10k euro is minimum sell value they will process. The investment  i have is direct with Guinness and not a platform.

So looks like i will have some cgt to pay

Least i have a better understanding of it all now,