📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

CGT ON 'NOTIONAL' GAIN GIA FOR TAX RETURN

Options
Hi 
I have a GIA and I am now filling out my tax return. The statement from my GIA provider includes a consolidated tax certificate which shows the dividends that have been earned on the funds in the GIA and on which I know that I will pay income tax. The dividends themselves are now just part of the GIA. Separately the statement from the GIA includes a Capital Gains report showing gains and losses for the year.  I haven't done anything with the funds in the GIA over the year so are these gains and losses 'notional' i.e the increase or decrease in value of the various investments over the year or have the gains or losses arisen where my provider may have switched investments over the year?
Do I pay CGT on the net gains shown on the report (less any annual CGT allowance) even though the funds are still in the GIA and nothing has been 'extracted' from the GIA by me over the year?
I am paying the GIA provider annual fees - can I deduct these from my capital gain or income to reduce my tax?
Hope that all makes sense
«1

Comments

  • Keep_pedalling
    Keep_pedalling Posts: 20,887 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    No these are paper gains, you will only have a CGT liability if you actually sell any of these assets 
  • HappyHarry
    HappyHarry Posts: 1,813 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    edited 11 January at 7:15PM
    Has the provider switched investments that you hold? If so, then yes, the CGT will be payable. It does not matter whether you have withdrawn monies from the GIA or not.

    It would be unusual for a provider to send a “notional” CGT statement. 

     No, you cannot offset your fees against your capital gain.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • DRS1
    DRS1 Posts: 1,243 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Are you sure the Capital Gains statement isn't just an investment report?
  • mildew50
    mildew50 Posts: 5 Forumite
    Eighth Anniversary First Post Combo Breaker
    Thank you all for your comments
    The statement from the provider is called "Capital Gains Tax Report" - so I think that maybe the provider has switched investments which means presumably that we have effectively sold some investments in the GIA and bought some other investments in the GIA so regardless of the fact that I have not extracted those gains, they are actual gains rather than paper gains so CGT is payable?
    Noted re no right to deduct provider fees to reduce our gain
  • DRS1
    DRS1 Posts: 1,243 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    So a third party can buy and sell your shares without you having a say in the matter?

    Is that discretionary portfolio management?

    Is that a good idea?
  • mildew50
    mildew50 Posts: 5 Forumite
    Eighth Anniversary First Post Combo Breaker
    yes it is a discretionary managed portfolio GIA so the provider (it is a financial advisory firm) manage the GIA.
    I am hoping its a good idea!
  • HappyHarry
    HappyHarry Posts: 1,813 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    mildew50 said:
    Thank you all for your comments
    The statement from the provider is called "Capital Gains Tax Report" - so I think that maybe the provider has switched investments which means presumably that we have effectively sold some investments in the GIA and bought some other investments in the GIA so regardless of the fact that I have not extracted those gains, they are actual gains rather than paper gains so CGT is payable?
    Noted re no right to deduct provider fees to reduce our gain
    Yes, as the investments are not in a tax-protected wrapper CGT becomes liable on disposal of each asset within the GIA.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • Nomunnofun1
    Nomunnofun1 Posts: 688 Forumite
    500 Posts Name Dropper
    DRS1 said:
    So a third party can buy and sell your shares without you having a say in the matter?

    Is that discretionary portfolio management?

    Is that a good idea?
    Very common - hopefully the increase in the value of the portfolio as a result of these decisions covers their fees!
  • eskbanker
    eskbanker Posts: 37,224 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    mildew50 said:
    yes it is a discretionary managed portfolio GIA so the provider (it is a financial advisory firm) manage the GIA.
    I am hoping its a good idea!
    If you're paying a company to manage your investments and don't understand the documentation they've sent, then you should be able to seek clarification from them rather than having to ask anonymous online strangers?
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,618 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    DRS1 said:
    So a third party can buy and sell your shares without you having a say in the matter?

    Is that discretionary portfolio management?

    Is that a good idea?
    Very common - hopefully the increase in the value of the portfolio as a result of these decisions covers their fees!
    But it sounds awfully like the portfolio manager can, in theory at least, create Capital Gains liability which the op doesn't necessarily have the cash funds to pay?
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.1K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244.1K Work, Benefits & Business
  • 599.1K Mortgages, Homes & Bills
  • 177K Life & Family
  • 257.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.