StJames Wealth Fund and Tax Return

PiggyBlank

A basic question, please educate me, if you will.

I am helping my wife fill in an online tax return.

She has money invested in a St James Place fund of Unit Trusts/Bonds  This was a cash investment and not a pension scheme.

We have a Dividend and Interest summary statement and I can see how to declare those on the tax return.

The questions now are

 1) does she have to declare the fund value/ ?

 2) does she have to declare any increase in fund value ?

 3) does she have to declare any withdrawals that have been taken ?

If she does, what are the Tax Return categories that apply to those amounts.

If it was a pension plan, I understand that you would have to declare money taken, but I don't think it is considered as a pension plan so is it sufficient to just declare the dividend and interest values ? If the fund value has increased is that already covered by the Dividend and Interest Tax Summary ?

TIA.

 

dunstonh

The questions now are

 1) does she have to declare the fund value/ ?

 2) does she have to declare any increase in fund value ?

 3) does she have to declare any withdrawals that have been taken ?

1 - no
2 - no, unrealised gains are not taxed. Only realised gains
3 - no 

Answers above based on the investments being held unwrapped. (i.e. not in an ISA or investment bond)

If it was a pension plan, I understand that you would have to declare money taken, but I don't think it is considered as a pension plan so is it sufficient to just declare the dividend and interest values ? If the fund value has increased is that already covered by the Dividend and Interest Tax Summary ?

it is either a pension or it isn't.  

Other taxation to consider is capital gains tax.   For example, if your wife has done a  bed & ISA and/or bed & pension transaction this year or sold funds for withdrawal.    These could give rise to a CGT liability.  Even if there is no liability, there is still a box on the tax return to record it, (if you are sent one).

Also any trades done through normal investment activity could give rise to CGT.

She should ask her adviser for a CGT report.  If it was an IFA, they can generate one with most providers/platforms.   I don't know what SJP do but given their massive charges, you would expect them to be able to generate the CGT report bound in leather and gold plating.

PiggyBlank

dunstonh said:

The questions now are

 1) does she have to declare the fund value/ ?

 2) does she have to declare any increase in fund value ?

 3) does she have to declare any withdrawals that have been taken ?

1 - no
2 - no, unrealised gains are not taxed. Only realised gains
3 - no 

Answers above based on the investments being held unwrapped. (i.e. not in an ISA or investment bond)

 

dunstonh, thank you for the very helpful answers.

I have an engineering brain, but sadly not an investment brain.

I get that the fund value rises and falls but I'm trying to understand under what circumstances you might need to declare a gain. So if I think of 2 fictitious example cases.

a) Start of year value  100k   End of year value 105k  funds withdrawn 4k

b) Start of year value  100k   End of year value 200k  funds withdrawn 200k

Under what conditions is a gain "realised" ? and subject to tax ?

InvesterJones

Gains/losses realised when you sell (withdraw). It's the capital gain that needs to be reported, not the withdrawal. Capital gain is a little more complicated than just the (proportion of the) amount the fund has gone up minus dividends, but as mentioned, they should be able to generate a report for you.

dunstonh

a) Start of year value  100k   End of year value 105k  funds withdrawn 4k

b) Start of year value  100k   End of year value 200k  funds withdrawn 200k

It doesn't work like that with unwrapped investments. 

The units sold in each of the funds held during the tax year either have a gain or a loss. Each fund is looked at individually, and it's not based on amounts withdrawn. For example, there may be a cash account in the GIA (general investment account) that feeds withdrawals, and no funds are sold. Or it may be that a portfolio rebalance was carried out, and a range of sales were made, and nothing was withdrawn. However, those sales would be classed as realised gains/losses.

its not the withdrawal that matters.  It is the sale and the original purchase price of each of the units.

Unless you have all the contract notes for the tax year and are inclined to manually calculate the gains from the original purchase unit prices (along with any previous tax year losses offset), I recommend that you get SJP to give you a CGT report. It will have the figures needed to go on the tax return.    

Your mum is paying for the service. So, it won't cost anything extra and CGT reports can be generated in minutes.

Under what conditions is a gain "realised" ? and subject to tax ?
Where units have been sold, then there is a potential liability to CGT.  The sale realises the gain or loss.  If no units were sold, then no liability for CGT will exist, irrespective of the total value of the holdings.

Typically, people who use unwrapped holdings do annual transactions, such as bed & ISA and/or bed & Pension and rebalance the portfolio to utilise the CGT allowance in full.     You would expect the SJP rep to be doing this as part of the fees they are being paid.     All those transactions would realise gains/losses.   So, you need the records of those trades to be work it out.    Hence, why getting it from SJP makes sense.

PiggyBlank

Thank you to dunstonh and InvesterJones for explaining the basics. I'm beginning to get the picture. I'll get the SJP CEO's chauffeur, to drop the CGT report scrolls over