Selling a fund and buying back - CGT

Beddie

I've got about £4k in Blue Whale Growth fund, which I built up monthly in their own saving plan which was run by Link. It's in 'R' share class with higher charges than 'I' class, which I cannot change as that is all they offer on that platform.

I looked into transferring it to my GIA with Lloyd's, without triggering a CGT gain, but I'm now thinking I could just sell it and buy it within 30 days, as under the bed and breakfasting avoidance rules that is not a gain.

However, if I sell the R class and buy the I class at Lloyd's, does that bypass the bed and breakfasting rule and mean I am making a chargeable gain?

masonic

If you sell one unit class and then take the proceeds and reinvest within 30 days in a different unit class, then you have made a disposal for CGT purposes. If Lloyds will accept it as a transfer and process a conversion to the I class, then you have not.

Linton

Beddie said:

I've got about £4k in Blue Whale Growth fund, which I built up monthly in their own saving plan which was run by Link. It's in 'R' share class with higher charges than 'I' class, which I cannot change as that is all they offer on that platform.

I looked into transferring it to my GIA with Lloyd's, without triggering a CGT gain, but I'm now thinking I could just sell it and buy it within 30 days, as under the bed and breakfasting avoidance rules that is not a gain.

However, if I sell the R class and buy the I class at Lloyd's, does that bypass the bed and breakfasting rule and mean I am making a chargeable gain?

I dont see how selling and rebuying a fund within 30 days benefits you.  Under the bed and breakfast rules you dont make a chargeable gain when selling but the previous prurchase price remains in place so you will be liable for extra CGT if you sell later.

Selling one charging class and buying another I believe is treated as rebuying the same fund. Others more knowledgable than me can confirm.

masonic

Linton said:

Beddie said:

I've got about £4k in Blue Whale Growth fund, which I built up monthly in their own saving plan which was run by Link. It's in 'R' share class with higher charges than 'I' class, which I cannot change as that is all they offer on that platform.

I looked into transferring it to my GIA with Lloyd's, without triggering a CGT gain, but I'm now thinking I could just sell it and buy it within 30 days, as under the bed and breakfasting avoidance rules that is not a gain.

However, if I sell the R class and buy the I class at Lloyd's, does that bypass the bed and breakfasting rule and mean I am making a chargeable gain?

I dont see how selling and rebuying a fund within 30 days benefits you.  Under the bed and breakfast rules you dont make a chargeable gain when selling but the previous prurchase price remains in place so you will be liable for extra CGT if you sell later..

It would enable the OP to transfer from one platform to another, where the platforms do not offer a common unit class of the fund in question, without making an unwanted chargeable gain. If it worked like that, which it doesn't.

Linton said:

Selling one charging class and buying another I believe is treated as rebuying the same fund. Others more knowledgable than me can confirm.

No this is not correct. Directly exchanging one unit class for another (e.g. through a conversion or switch at the fund house) is considered a reorganisation of capital and is not a disposal. Whereas selling one unit class in one trade and buying a different unit class in another is a disposal, because they are different financial instruments and cannot be matched for bed and breakfasting.

Beddie

Linton said:

Beddie said:

I've got about £4k in Blue Whale Growth fund, which I built up monthly in their own saving plan which was run by Link. It's in 'R' share class with higher charges than 'I' class, which I cannot change as that is all they offer on that platform.

I looked into transferring it to my GIA with Lloyd's, without triggering a CGT gain, but I'm now thinking I could just sell it and buy it within 30 days, as under the bed and breakfasting avoidance rules that is not a gain.

However, if I sell the R class and buy the I class at Lloyd's, does that bypass the bed and breakfasting rule and mean I am making a chargeable gain?

I dont see how selling and rebuying a fund within 30 days benefits you.  Under the bed and breakfast rules you dont make a chargeable gain when selling but the previous prurchase price remains in place so you will be liable for extra CGT if you sell later.

Selling one charging class and buying another I believe is treated as rebuying the same fund. Others more knowledgable than me can confirm.

Thank for your reply. The gain is less than the (current) annual allowance, but I will have other gains this tax year, so wanted to avoid this gain and also move them to the clean share class. All a bit convoluted, I admit! I could just leave it until next tax year, but I was curious as to how a sale/purchase would be treated. Appreciate your input.

Beddie

masonic said:

If you sell one unit class and then take the proceeds and reinvest within 30 days in a different unit class, then you have made a disposal for CGT purposes. If Lloyds will accept it as a transfer and process a conversion to the I class, then you have not.

Thank you, that makes sense. What put me off transferring is I have to fill in a Stock transfer form, as Lloyd's couldn't do it via their "normal" systems. I'm sure it's straightforward, but it looked anything but!