CSH2: taxation and performance

aroominyork

I’m probably not the only person who cannot get their head around this so I’m going to ask if you can ABC this issue. I’m not clear whether the bottom line of the ERI is that more is taxed than (CGT on) the gain when CSH2 is sold. Also whether equalisation is relevant for units bought during the relevant year, and anything else about which you’d be kind enough to clear the fog.

masonic

ERI is a more general form of what we do in the UK whereby accumulation funds post notional dividend or interest distributions. UK open-ended funds must distribute all of their income, whereas offshore funds are not required to do so. ERI therefore captures everything HMRC has classified as income that you would need to declare as such. Other than that it is equivalent to dealing with an Acc class of a UK OEIC.

Since CSH2 is essentially a bond fund, it is likely the income will be interest taxed at 20% for a basic rate taxpayer (or 0% if they have unused PSA available). The report declaring the ERI should confirm this. If not, it would be treated as a dividend and taxed at the relevant rates. It will not be included in your capital gain, so you should deduct it when calculating disposals.

aroominyork

masonic said:

ERI is a more general form of what we do in the UK whereby accumulation funds post notional dividend or interest distributions. UK open-ended funds must distribute all of their income, whereas offshore funds are not required to do so. ERI therefore captures everything HMRC has classified as income that you would need to declare as such. Other than that it is equivalent to dealing with an Acc class of a UK OEIC.

Since CSH2 is essentially a bond fund, it is likely the income will be interest taxed at 20% for a basic rate taxpayer (or 0% if they have unused PSA available). The report declaring the ERI should confirm this. If not, it would be treated as a dividend and taxed at the relevant rates. It will not be included in your capital gain, so you should deduct it when calculating disposals.

So whatever amount is declared as ERI - in this case €34.5541 per unit - is declared as interest-taxable ERI, and €34.5541 is deducted from the sale price of each unit? Which means that, assuming no PSA or CGT allowance is available, €34.5541 would be taxed at (basic rate) 20% instead of 18%? And equalisation is not a relevant issue?

masonic

aroominyork said:

masonic said:

ERI is a more general form of what we do in the UK whereby accumulation funds post notional dividend or interest distributions. UK open-ended funds must distribute all of their income, whereas offshore funds are not required to do so. ERI therefore captures everything HMRC has classified as income that you would need to declare as such. Other than that it is equivalent to dealing with an Acc class of a UK OEIC.

Since CSH2 is essentially a bond fund, it is likely the income will be interest taxed at 20% for a basic rate taxpayer (or 0% if they have unused PSA available). The report declaring the ERI should confirm this. If not, it would be treated as a dividend and taxed at the relevant rates. It will not be included in your capital gain, so you should deduct it when calculating disposals.

So whatever amount is declared as ERI - in this case €34.5541 per unit - is declared as interest-taxable ERI, and €34.5541 is deducted from the sale price of each unit? Which means that, assuming no PSA or CGT allowance is available, €34.5541 would be taxed at (basic rate) 20% instead of 18%? And equalisation is not a relevant issue?

Equalisation will apply if it is declared in the report. You can see that covered in Monevator's article on ERI.

aroominyork

masonic said:

aroominyork said:

masonic said:

ERI is a more general form of what we do in the UK whereby accumulation funds post notional dividend or interest distributions. UK open-ended funds must distribute all of their income, whereas offshore funds are not required to do so. ERI therefore captures everything HMRC has classified as income that you would need to declare as such. Other than that it is equivalent to dealing with an Acc class of a UK OEIC.

Since CSH2 is essentially a bond fund, it is likely the income will be interest taxed at 20% for a basic rate taxpayer (or 0% if they have unused PSA available). The report declaring the ERI should confirm this. If not, it would be treated as a dividend and taxed at the relevant rates. It will not be included in your capital gain, so you should deduct it when calculating disposals.

So whatever amount is declared as ERI - in this case €34.5541 per unit - is declared as interest-taxable ERI, and €34.5541 is deducted from the sale price of each unit? Which means that, assuming no PSA or CGT allowance is available, €34.5541 would be taxed at (basic rate) 20% instead of 18%? And equalisation is not a relevant issue?

Equalisation will apply if it is declared in the report. You can see that covered in Monevator's article on ERI.

No equalisation is shown on www.kpmgreportingfunds.co.uk - whereas it is for some other funds - so I'll assume none applies.

The reporting timeframe - with ERI applied to units held on 30 October but deemed as distributed six months later on 30 April - means that for any sales made between 30 October and 5 April you would declare/pay CGT in one tax year but declare/pay income tax on the ERI the following tax year. Fun record keeping!

masonic

The ERI headache was my main reason for prioritising getting Ireland domiciled ETFs ISA wrapped in priority to my investment trusts.

LateGenXer

easysaver said:

For the benefit of those who hold CSH2 outside of tax shelters the Excess Reported Income (ERI) for the last reporting period (1/11/22 - 31/10/23) was 34.5541 EUR, equivalent to approx 2.5% if my calcs are correct. Interest rates rose from 3% on 3/11/22 to 5.25% on 3/8/23.

I find odd that the ERI currency is now in EUR.  The fund currency is GBP, and the ERI figures reported until 2021 were in GBP (for example, the 30/04/2021 distribution was GBP 2.3578.)  Then again, there seems to be no rhyme or reason with this fund's ERI reports, after 0 EUR for two years, now non-zero EUR ERI...

It also annoys me that Amundi published the ERI for period ending in 31/10/2023 in September 2024, approximately 10 months after the period.  But looking at previous reports on www.kpmgreportingfunds.co.uk it is their standard practice unfortunately...

cloud_dog

Amundi ETF Fund(s) CSH2 Merging.

https://www.londonstockexchange.com/news-article/CSH2/amundi-investment-solutions-amundi-etf-important-information-mergers-on-amundi-funds-10-03-2025/16884437

From what I can see they are merging the unhedged versions of the funds (GBP and USD) into the hedged versions of the fund(s).

Any thoughts?

masonic

cloud_dog said:

Amundi ETF Fund(s) CSH2 Merging.

https://www.londonstockexchange.com/news-article/CSH2/amundi-investment-solutions-amundi-etf-important-information-mergers-on-amundi-funds-10-03-2025/16884437

From what I can see they are merging the unhedged versions of the funds (GBP and USD) into the hedged versions of the fund(s).

Any thoughts?

The absorbed and receiving funds both have the same ISIN and ticker, so not sure what this would mean beyond a different name. The effect of hedging is going to be pretty negligible.

roose0

cloud_dog said:

Amundi ETF Fund(s) CSH2 Merging.

From what I can see they are merging the unhedged versions of the funds (GBP and USD) into the hedged versions of the fund(s).

Any thoughts?

I was surprised to see it now tracks €STR (Euro Short-Term Rate) instead of SONIA. It looks like the benchmark index changed from SONIA to €STR at some time between 2023 and 2024.

The old KIID: "The Fund is benchmarked with the SONIA compounded rate (Benchmark Index)."

https://web.archive.org/web/20230815033527/https://doc.morningstar.com/document/a5dbab820b4ecd0701a2cffe99ca9153.msdoc/?clientid=ajbell&key=805803a4ca9fc338

The current KIID: "The Sub-Fund is benchmarked with the €STR (Euro Short-Term Rate) compounded rate ("Benchmark Index")."

https://web.archive.org/web/20250204231327/https://doc.morningstar.com/document/99be123548129e70a166e2df45f9d775.msdoc/?clientid=ajbell&key=805803a4ca9fc338

The announcement stated, "Characteristics of the Receiving ETFs will remain the same after the effective date." I don't see any changes being made other than the names of the funds.