ISA mistake - opened a General Investment Account.

James19791

DRS1 said:

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?

Yes - I mentioned this elsewhere; i've just checked again - Nutmeg give me some CGT data including net chargeable CGT gain.  It lists the sales and has the gains/loss listed for each.  I'm yet to really study it as I've been trying to get broader advice so far. 

James19791

vacheron said:

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.

Yes I've said before that I have found a tax summary from Nutmeg including CGT gain.  I haven't fully studied it yet as I've been seeking broader advice on what to do.  Could I use this to do my CGT return if I go over the allowance?  Descriptions from others have suggested it requires a professional to do as it's very complicated.  

vacheron

James19791 said:

vacheron said:

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.

Yes I've said before that I have found a tax summary from Nutmeg including CGT gain.  I haven't fully studied it yet as I've been seeking broader advice on what to do.  Could I use this to do my CGT return if I go over the allowance?  Descriptions from others have suggested it requires a professional to do as it's very complicated.  

I haven't seen it, but I can't imagine it is that complicated. 

From the same page:

What does the CTC include?
Your CTC will include details of any dividends, income and capital gain or loss for the period in question.

So this form should give you the condensed summary of all the capital gains and losses incurred by the buying and selling of investments which Nutmeg have executed during that financial year (hopefully disregarding any bed and breakfast transactions that may have occurred).  

So if they tell you they made a net capital gain (on your behalf) in 2024-25 of £2,000, this is the figure you should quote on your tax return. 

This should make it "easy" to pay the correct CGT on your tax return once the financial year is over, but the problem you have is that Nutmeg are trading on your behalf throughout the tax year, so if you decide to sell something else during the current tax year, you have no idea how much their gains to date have eaten in to your annual allowance by that point, and even if you did, you have no guarantee that their further trading won't then push you over the CGT threshold between the time you sell your other investment and the end of that current tax year.

The opposite is also true, in that you may only sell £3K of gains, but then find out that Nutmeg have incurred a net capital loss in that same year, meaning you could have offset this loss and actually sold more investments while remaining CGT free.

This has at least highlighted an issue with Robo Investors managing GIA's which I had never considered before! 

dunstonh

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? 

Platforms aimed at professionals have CGT calculators on them.
You can also download all the data on buys and sells to copy into third-party CGT calculators.

Serious investors tend not to trade very often in GIAs to keep the transaction history low.   They also tend to use income units and not acc units as it makes the CGT calcs easier.

 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?
You have to report the gain and HMRC require you to provide the computations on how you came by that gain figure.

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.  And investment platforms provide the data.  The question being asked is whether Nutmeg provides that data.

Most Nutmeg investors are low value.   Serious investors wouldn't use their service but it does make a good option for those that are starting out with small values.

It doesnt need professionals as long as it gives you the data and you understand the calculations required within the CGT rules.

So if they tell you they made a net capital gain (on your behalf) in 2024-25 of £2,000, this is the figure you should quote on your tax return. Although if the OP had no other reportable gains, the total disposals were less than £50k, then there would be nothing to report to HMRC as it's within allowances.

James19791

So given that annual tax summaries are produced by Nutmeg at the end of the tax year, I would say it seems 'easier' in a sense to wait for those documents and use them to pay the due CGT if any?  Reporting it to HMRC should be doable with the Nutmeg documents. I realise that by not knowing any current FY sales you are going in 'blind' in terms of current capital gains but I know likely CGT figures now anyway (around £1k per £20k +/- extra depending on fund sales) which I can either pay from the proceeds of the sale or from other cash.

I agree Nutmeg is not the best platform.  In terms of growth I have done well but it had been my intention to switch to a lower fee simple (diverse) Index fund which I read most of the time beat the 'managed' funds when fees are taken into account.  

masonic

If your only unwrapped investments are with Nutmeg, then you should be able to rely on their figures. The danger comes when you hold the same funds elsewhere.

You could attach the Nutmeg report along with your calculations referencing their figures.

dunstonh

I agree Nutmeg is not the best platform.

Nutmeg isnt a platform at all.

 In terms of growth I have done well but it had been my intention to switch to a lower fee simple (diverse) Index fund which I read most of the time beat the 'managed' funds when fees are taken into account.  

In this cycle that has been the case because of the weight of US equities and US equities being the best area in this cycle.    In the previous cycle where US equities underperformed the rest and equity income was best, it was not the case.

James19791

dunstonh said:

I agree Nutmeg is not the best platform.

Nutmeg isnt a platform at all.

 In terms of growth I have done well but it had been my intention to switch to a lower fee simple (diverse) Index fund which I read most of the time beat the 'managed' funds when fees are taken into account.  

In this cycle that has been the case because of the weight of US equities and US equities being the best area in this cycle.    In the previous cycle where US equities underperformed the rest and equity income was best, it was not the case.

I admit I am only just learning about index funds etc having been with Nutmeg and not really thinking of it but surely there are several index funds that weigh the US differently or even exclude them?  Or perhaps you are saying that because a majority of funds have a big US weight that is the reason a majority of index funds have outperformed 'managed funds' because of recent US success? 

I've heard though that a lot of research has been done on 'passive' low fee funds v 'managed' high fee and it's pretty conclusive when fees are taken off that 'passive' out performs? It's only what I've heard over the last few weeks though.  

James19791

masonic said:

If your only unwrapped investments are with Nutmeg, then you should be able to rely on their figures. The danger comes when you hold the same funds elsewhere.

You could attach the Nutmeg report along with your calculations referencing their figures.

I don't have any other investments.  Hopefully I can do it then. 

Thanks that's useful to know re attaching the report.  

dunstonh

I admit I am only just learning about index funds etc having been with Nutmeg and not really thinking of it but surely there are several index funds that weigh the US differently or even exclude them?  

That would be active management and not passive.
It is possible to build a portfolio of trackers using active management on the weightings.

Or perhaps you are saying that because a majority of funds have a big US weight that is the reason a majority of index funds have outperformed 'managed funds' because of recent US success? 

Correct.   US was best in this cycle. So, anything heavy in US equities has done well.   US was amongst the worst in the previous.  So, anything heavy in US equities previously did poorly.

I've heard though that a lot of research has been done on 'passive' low fee funds v 'managed' high fee and it's pretty conclusive when fees are taken off that 'passive' out performs? It's only what I've heard over the last few weeks though.  

You need to be careful of recency bias and where the research comes from.   In the US, its virtually impossible for active funds to beat passive.  So, any research based on US data will reflect that.     In some countries, it is different.   UK equity used to be an area where managed frequently was better but that was in the cycle when equity income was king.  Not total return.