ISA mistake - opened a General Investment Account.

dunstonh

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

James19791

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

dunstonh

James19791 said:

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

You are required to submit the computations to HMRC.   If you have the data and time to do that, then fair enough.  Do you have that data and time?

James19791

dunstonh said:

James19791 said:

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

You are required to submit the computations to HMRC.   If you have the data and time to do that, then fair enough.  Do you have that data and time?

I'm sure I'm not the only Nutmeg customer to have to pay CGT and I don't see the individual trades as it's part of a complicated managed portfolio so I'm guessing they would handle the reporting of my actual 'gain' (if that is the right term) if I sold say £20k of the pot.  I have no experience in this but i guess I could then be able to work out how much tax is due?

Again maybe I'm missing something but how would I be able to compute my allowance say in this financial year without knowing in advance all the data regarding the gains from trades for the current year?  That doesn't seem any easier than doing a withdrawal and then working it out if that is the case? 

masonic

James19791 said:

dunstonh said:

James19791 said:

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

You are required to submit the computations to HMRC.   If you have the data and time to do that, then fair enough.  Do you have that data and time?

I'm sure I'm not the only Nutmeg customer to have to pay CGT and I don't see the individual trades as it's part of a complicated managed portfolio so I'm guessing they would handle the reporting of my actual 'gain' (if that is the right term) if I sold say £20k of the pot.  I have no experience in this but i guess I could then be able to work out how much tax is due?

Again maybe I'm missing something but how would I be able to compute my allowance say in this financial year without knowing in advance all the data regarding the gains from trades for the current year?  That doesn't seem any easier than doing a withdrawal and then working it out if that is the case? 

No, investment platforms do not take responsibility for declaring their customers' capital gains. Not that they would, but even if they wanted to, they cannot know what holdings a customer has elsewhere that could impact their Section 104 holdings. An investment platform should be able to provide you with the history of trades on your account with them. It would then be your responsibility to calculate your gain, or pay a professional to do it for you, and where appropriate report that information to HMRC either using the real time reporting service or by registering for Self Assessment.

You are not required to report your capital gains to HMRC until after the end of the tax year in question, so you can obtain details of all the necessary trades.

James19791

masonic said:

James19791 said:

dunstonh said:

James19791 said:

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

You are required to submit the computations to HMRC.   If you have the data and time to do that, then fair enough.  Do you have that data and time?

I'm sure I'm not the only Nutmeg customer to have to pay CGT and I don't see the individual trades as it's part of a complicated managed portfolio so I'm guessing they would handle the reporting of my actual 'gain' (if that is the right term) if I sold say £20k of the pot.  I have no experience in this but i guess I could then be able to work out how much tax is due?

Again maybe I'm missing something but how would I be able to compute my allowance say in this financial year without knowing in advance all the data regarding the gains from trades for the current year?  That doesn't seem any easier than doing a withdrawal and then working it out if that is the case? 

No, investment platforms do not take responsibility for declaring their customers' capital gains. Not that they would, but even if they wanted to, they cannot know what holdings a customer has elsewhere that could impact their Section 104 holdings. An investment platform should be able to provide you with the history of trades on your account with them. It would then be your responsibility to calculate your gain, or pay a professional to do it for you, and where appropriate report that information to HMRC either using the real time reporting service or by registering for Self Assessment.

You are not required to report your capital gains to HMRC until after the end of the tax year in question, so you can obtain details of all the necessary trades.

Ok thank you for that.  How would I (or a professional) know how much I can pay to remain below the CGT allowance for this year while trades are happening regularly within the portfolio?  And how is this easier than withdrawing £20k and having to keep track of all the trades anyway? 

DRS1

How does Nutmeg work?  With a traditional investment platform you get to see each individual share etf unit trust etc that you have bought with information showing the price paid the current value and the gain or loss.  You also get contract notes whenever you buy or sell anything.  This is all information you need to do your CGT calculations.

Doesn't Nutmeg do that?

masonic

James19791 said:

masonic said:

James19791 said:

dunstonh said:

James19791 said:

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

You are required to submit the computations to HMRC.   If you have the data and time to do that, then fair enough.  Do you have that data and time?

I'm sure I'm not the only Nutmeg customer to have to pay CGT and I don't see the individual trades as it's part of a complicated managed portfolio so I'm guessing they would handle the reporting of my actual 'gain' (if that is the right term) if I sold say £20k of the pot.  I have no experience in this but i guess I could then be able to work out how much tax is due?

Again maybe I'm missing something but how would I be able to compute my allowance say in this financial year without knowing in advance all the data regarding the gains from trades for the current year?  That doesn't seem any easier than doing a withdrawal and then working it out if that is the case? 

No, investment platforms do not take responsibility for declaring their customers' capital gains. Not that they would, but even if they wanted to, they cannot know what holdings a customer has elsewhere that could impact their Section 104 holdings. An investment platform should be able to provide you with the history of trades on your account with them. It would then be your responsibility to calculate your gain, or pay a professional to do it for you, and where appropriate report that information to HMRC either using the real time reporting service or by registering for Self Assessment.

You are not required to report your capital gains to HMRC until after the end of the tax year in question, so you can obtain details of all the necessary trades.

Ok thank you for that.  How would I (or a professional) know how much I can pay to remain below the CGT allowance for this year while trades are happening regularly within the portfolio?  And how is this easier than withdrawing £20k and having to keep track of all the trades anyway? 

First you obtain an itemised list of transactions for each holding close to the end of the tax year. Then you work through them to determine the base cost of each S104 holding and any capital gains or losses so far crystallised. If trades are happening regularly within the portfolio, then you'll need to account for any Bed & Breakfast matching required where assets are reacquired within 30 days of disposal. Once you know your current position, then you'll be able to calculate how much you can sell at that point to remain below the CGT allowance, leaving some margin for any other disposals that might happen after you sell. Depending on how frequently holdings are actually bought and sold within the portfolio, this may range from complicated to very complicated indeed. You'd then need to repeat on each subsequent tax year until you'd sold everything.

If you dispose of £20k, then you will have to do the same work, and if you end up exceeding the CGT allowance, you'd need to turn in your homework for marking too. So in that sense, the former option is potentially easier. But nobody knows what the future holds and you could end up carrying your investments into a different tax regime.

In your shoes, I think I'd be tempted to take the hit and sell the lot just to make it end. But I would avoid slipping into higher rate tax through a large pension contribution if I were going to go down that route.

It is a shame you didn't realise the error back in April after markets had been ravaged by Trump's tariff crash. Who knows, maybe there will be another selling opportunity where you could reinvest in simpler holdings until you can Bed & ISA. 

James19791

masonic said:

James19791 said:

masonic said:

James19791 said:

dunstonh said:

James19791 said:

dunstonh said:

It also depends on what portfolio trades have taken place over the years.  Previous year CGT allowances may have been partly used and its possible that  Section 104 holdings now exist.

If there have been many trades then keeping it under the CGT allowance limit may be the simpler option rather than working it out over multiple years.

Assuming continued investment growth then keeping it in an account where gains are subject to a 24% tax is surely not as good as getting that money into a 0% tax account as soon as possible? Even if there is roughly £1k per £20k tax to withdraw and transfer now.  With 0% growth ongoing I could see that only CGT allowance sized withdrawals might be better.  Am I missing something here? 

You are required to submit the computations to HMRC.   If you have the data and time to do that, then fair enough.  Do you have that data and time?

I'm sure I'm not the only Nutmeg customer to have to pay CGT and I don't see the individual trades as it's part of a complicated managed portfolio so I'm guessing they would handle the reporting of my actual 'gain' (if that is the right term) if I sold say £20k of the pot.  I have no experience in this but i guess I could then be able to work out how much tax is due?

Again maybe I'm missing something but how would I be able to compute my allowance say in this financial year without knowing in advance all the data regarding the gains from trades for the current year?  That doesn't seem any easier than doing a withdrawal and then working it out if that is the case? 

No, investment platforms do not take responsibility for declaring their customers' capital gains. Not that they would, but even if they wanted to, they cannot know what holdings a customer has elsewhere that could impact their Section 104 holdings. An investment platform should be able to provide you with the history of trades on your account with them. It would then be your responsibility to calculate your gain, or pay a professional to do it for you, and where appropriate report that information to HMRC either using the real time reporting service or by registering for Self Assessment.

You are not required to report your capital gains to HMRC until after the end of the tax year in question, so you can obtain details of all the necessary trades.

Ok thank you for that.  How would I (or a professional) know how much I can pay to remain below the CGT allowance for this year while trades are happening regularly within the portfolio?  And how is this easier than withdrawing £20k and having to keep track of all the trades anyway? 

First you obtain an itemised list of transactions for each holding close to the end of the tax year. Then you work through them to determine the base cost of each S104 holding and any capital gains or losses so far crystallised. If trades are happening regularly within the portfolio, then you'll need to account for any Bed & Breakfast matching required where assets are reacquired within 30 days of disposal. Once you know your current position, then you'll be able to calculate how much you can sell at that point to remain below the CGT allowance, leaving some margin for any other disposals that might happen after you sell. Depending on how frequently holdings are actually bought and sold within the portfolio, this may range from complicated to very complicated indeed. You'd then need to repeat on each subsequent tax year until you'd sold everything.

If you dispose of £20k, then you will have to do the same work, and if you end up exceeding the CGT allowance, you'd need to turn in your homework for marking too. So in that sense, the former option is potentially easier. But nobody knows what the future holds and you could end up carrying your investments into a different tax regime.

In your shoes, I think I'd be tempted to take the hit and sell the lot just to make it end. But I would avoid slipping into higher rate tax through a large pension contribution if I were going to go down that route.

It is a shame you didn't realise the error back in April after markets had been ravaged by Trump's tariff crash. Who knows, maybe there will be another selling opportunity where you could reinvest in simpler holdings until you can Bed & ISA. 

Thanks again - I appreciate the input.  This is how I see it.  Thousands of people in the UK have multi fund portfolios with trades in them potentially liable for CGT.  If a professional needs to do the work then a professional does the work.  Its not an insurmountable problem.  

Both of the scenarios as you describe them require a professional (withdrawing only the max to stay under the allowance and withdrawing £20k).  And since it seems clear to me that getting the money into tax free status sooner is a no brainer (assuming even a little growth) I don't see how this 'stay under the allowance' strategy holds up Vs transfer £20k/year.    

Sure there might me less growth/stock market crash/rule changes but I cant predict that.  

vacheron

Am I missing something, or have you not been receiving these? 

Extract below from the Nutmeg Support page

 Tax reporting

We issue a yearly tax pack to customers who hold investments within a general investment account (GIA). This type of account can sometimes be called a 'standard account' or 'non-ISA'

If you hold a GIA you will receive a consolidated tax certificate (CTC) which includes details for a full tax year.

As dividend, income or capital gains are not reportable on ISAs or pensions, you will not receive a report if you hold only these account types.