Stockbrokers for Investment Clubs Sep’25

poseidon1

Arthur_Pewty said:

We are looking at becoming a Private Limited Company.........are therr any major problems

See my post at 21 October 3.20pm.

 Incidentally, I subsequently  changed my mind about LLPs.

  I suspect Investment clubs  as passive investors might not pass the HMRC business/trade criteria to be accorded LLP tax transparency status. There is a danger that income/ gains maybe liable to corporation tax if HMRC view it as a mere investment holding entity rather then a business enterprise.

I do wonder if any of the proponents of the LLP alternative structure  have actually sought expert tax advice on this issue, before jumping in.

Arthur_Pewty

We have today formed a limited company for our investment club.  Didn't take too long and cost just £50 at companies house.  Now need to register with HMRC for a UTR, get an LEI and apply to AJ Bell for a dealing account.  AJ Bell have confirmed they will support our application. Will report on progress.

poseidon1

Arthur_Pewty said:

We have today formed a limited company for our investment club.  Didn't take too long and cost just £50 at companies house.  Now need to register with HMRC for a UTR, get an LEI and apply to AJ Bell for a dealing account.  AJ Bell have confirmed they will support our application. Will report on progress.

Presumably after considering all the tax implications ( Corporation and personal) as well as the  new additional compliance and accounting costs, you considered this  a worthwhile annual outlay to access AJ Bell's platform?

Hopefully your collective annual income and gains will make this transition to company status worthwhile, and you will not be planning to issue annual dividends  from the company to members (double taxation). 

Oldhead45

All going well with CFM transfer - all shared have migrated and I can see them on line in my CFM account.  There's obviously more going on but moving quicker than anticipated!

phlebas192

I do hope that those pursuing alternative legal structures do report back on how they fare. Our own IC (with assets of high hundreds of £000s) decided it wasn't worth it from a tax angle. But there again we have no experience of running a limited company or LLC so maybe we've missed something. 

Our club has been dissolved and the assets have been distributed to individual trading accounts with ii. By taking advantage of the "recommend ii" £200 payments, the offer of no monthly fees for 12 months and up to £100 trading credits this has proved a decent option. Now its mostly a case of transferring our holdings into ISAs to save on future tax.

Euro_Skank

Just out of interest, what caused investment clubs' demise? 

phlebas192

Euro_Skank said:

Just out of interest, what caused investment clubs' demise? 

Interactive Investors was the only mainsteam broker that offered investment club accounts. In August they announced they were withdrawing these accounts with just 6 weeks notice. 

Ironically (?) the only reason ii had a large number of such accounts was that a few years earlier they took over the business of Share Centre and presumably that decision was based in part on the investment club accounts that Share Centre had.

PipneyJane

phlebas192 said:

Euro_Skank said:

Just out of interest, what caused investment clubs' demise? 

Interactive Investors was the only mainsteam broker that offered investment club accounts. In August they announced they were withdrawing these accounts with just 6 weeks notice. 

Ironically (?) the only reason ii had a large number of such accounts was that a few years earlier they took over the business of Share Centre and presumably that decision was based in part on the investment club accounts that Share Centre had.

@Euro_Skank I think investment clubs just stopped being “flavour of the month” to stockbrokers, since there is little media coverage of them these days.  Once they stopped being fashionable, the number of brokerages offering them declined and many brokers transferred/sold their clubs onwards.  When my investment club started in the early 2000’s, we went with Barclay’s.  (No recollection why.). They sold us to Share Centre, who sold us to ii.  At no point were we given a choice re changing broker.

(IIRC the first I heard about investment clubs was from the publicity surrounding the book by the Beardstown Ladies, published in 1995.)

My club has now disbanded and our shareholdings split between the members.  I’ve transferred my shares from ii to my regular broker and am now working out how to transfer them into my ISA while avoiding capital gains tax.  My weekend tasks are a) calculating the gain on each share - the original prices were lost in one of the club transfers, plus we reinvested dividends - and b) refreshing my memory re whether transferring shares into an ISA counts as part of your £20k annual limit.  (I’m assuming the answer is yes.).

< sigh >

If the Capital Gains Tax Free Allowance had kept pace with inflation, instead of being reduced by the last Government, it’d now be over £17k and I wouldn’t have to work out my gains.  (It was £12,300 in 2022, now it’s £3,000.). Humph!

- Pip

phlebas192

PipneyJane said:

- and b) refreshing my memory re whether transferring shares into an ISA counts as part of your £20k annual limit.  (I’m assuming the answer is yes.).

Yes it does. Shares cannot be transferred directly into an ISA, they have to be first sold, the cash added to the ISA as part of your £20k limit and then rebought inside the ISA. Brokers generally offer a 'bed & ISA' service which will automate this for you, often with reduced fees.

Driverxyz

We opened an account with GHC because it was much more substantial than CFM which seemed to be changing its terms on the fly. 

Our account with GHC was registered on the 29th October, and we were given an estimated completion date by II of the 16th December.  The shares were transferred last week and the cash yesterday.  II have stated that the transfer is now complete and to close the account with them. GHC say the transfer will complete in the next few days.