ISA mistake - opened a General Investment Account.

James19791

Can I ask please for advice re 2024-2025 tax year.  

Context - I earn £50,818 taxable income.  Pension contributions £6,089.  I have around £5000 in normal (non ISA) bank account with about £7/month gross interest on that.  No other investments (other than my Nutmeg account).

Also for context, my Nutmeg account (set) portfolio is made up of 8 different (mostly JP Morgan Reseach Enhamced) ETF's and a small amount of cash.

For 2024-2025 - total capital gains was £2,300.  It lists the sales (12 in total) with disposals of around £13,400 and allowable costs of £11,100. So this keeps me under the CGT alowance of £3000 for 2024-2025.

Untaxed interest is listed as £8 (gross).  I understand that interest allowance is £500?  So this is under the allowance even when added to my bank account interest.

Excess income as dividend is £838 (gross).  Allowance is £500 so £338 is subject to tax at 33.75% so £114 dividend tax is due).  It also mentions that since the ETF's are domiciled in Ireland+Luxemburg it lists it as 'overseas' but doesnt mention if this has tax implications.  Is it relevant at all except where to correctly record it on the tax return?

Have I got that right?  I know I need to start process now with HMRC as October is the deadline?

Thanks

DRS1

Are you doing a paper return?  For online returns the deadline is the end of January.

The domicile of the ETFs just means they count as foreign dividends which might have to go on the Foreign pages of the tax return.  I suspect no tax has been deducted so it is just a matter of entering the figures and not claiming any foreign tax credit.

Even though the interest figures may be below the £500 (and with those pension contributions you may get £1000) you still need to include them in the tax return.

You are not going to need to include the CGT info on the figures you have given as you are below the disposals threshold and your gain is below £3000.  Just as well as the CGT sums are a bit more complicated for 24/5 than normal.

James19791

Thanks for that.  I'll do the tax return online if I can.  Do I need to register for that ASAP?  

masonic

DRS1 said:

The domicile of the ETFs just means they count as foreign dividends which might have to go on the Foreign pages of the tax return.  I suspect no tax has been deducted so it is just a matter of entering the figures and not claiming any foreign tax credit.

As it is over £500 it will need to go on the foreign pages.

James19791 said:

Thanks for that.  I'll do the tax return online if I can.  Do I need to register for that ASAP?  

I would not delay registering. It can take a couple of weeks to receive the required details to set up your account through the post.

DRS1

masonic said:

DRS1 said:

The domicile of the ETFs just means they count as foreign dividends which might have to go on the Foreign pages of the tax return.  I suspect no tax has been deducted so it is just a matter of entering the figures and not claiming any foreign tax credit.

As it is over £500 it will need to go on the foreign pages.

James19791 said:

Thanks for that.  I'll do the tax return online if I can.  Do I need to register for that ASAP?  

I would not delay registering. It can take a couple of weeks to receive the required details to set up your account through the post.

Yes for some reason I thought it was more and planned to add something but then I checked and saw it was only £500.  I should have gone back and changed might to will.  Sorry.

OP If you are doing self assessment for the first time I think there is a 5 October deadline for telling HMRC you need to do it.  Maybe that doesn't matter?  Someone like @Dazed_and_C0nfused will know.

Self Assessment tax returns: Registering for Self Assessment - GOV.UK  

James19791

Thanks for that.  

Can I ask please; that if some of my 'gain' has been 'realised' in last FY and previously years (due to the sales/adjustments in the portfolio) that should reduce slightly CGT due if and when I come to sell some shares?  

Also, after selling £20k and putting in a new s&s ISA (plan is other platform) in this and next few FY, is there benefit to selling the rest and putting into another GIA (on same platform as a&s ISA) that only has 1 fund (diverse Index fund) if only to simplify CGT calculations for future years.  Then the only years with multiple fund sales would be 2025-2026 tax year.  Future years would be sale of 1 fund only as the money is moved to the ISA. Assuming similar growth/loss to current Nutmeg GIA.  Or am I overthinking it? 

Thanks,

masonic

James19791 said:

Can I ask please; that if some of my 'gain' has been 'realised' in last FY and previously years (due to the sales/adjustments in the portfolio) that should reduce slightly CGT due if and when I come to sell some shares?  

Also, after selling £20k and putting in a new s&s ISA (plan is other platform) in this and next few FY, is there benefit to selling the rest and putting into another GIA (on same platform as a&s ISA) that only has 1 fund (diverse Index fund) if only to simplify CGT calculations for future years.  Then the only years with multiple fund sales would be 2025-2026 tax year.  Future years would be sale of 1 fund only as the money is moved to the ISA. Assuming similar growth/loss to current Nutmeg GIA.  Or am I overthinking it? 

If you are using the figures provided by Nutmeg, then the expectation would be that they have accounted for disposals in prior years. But it is your responsibility to ensure you are reporting the correct figures, so worth checking if you can.

For the future, it would really depend how confident you are with the information provided by Nutmeg. Moving to a simpler system would make it easier for you to do the calculations yourself, but you'll be paying more tax up front due to the switch.

If markets continue on the trajectory they started last Friday, you may have an opportunity to sell without gain in the future.

QrizB

masonic said:

If markets continue on the trajectory they started last Friday, you may have an opportunity to sell without gain in the future.

Yes, by this time tomorrow the problem might've solved itself!

DRS1

James19791 said:

Thanks for that.  

Can I ask please; that if some of my 'gain' has been 'realised' in last FY and previously years (due to the sales/adjustments in the portfolio) that should reduce slightly CGT due if and when I come to sell some shares?  

Also, after selling £20k and putting in a new s&s ISA (plan is other platform) in this and next few FY, is there benefit to selling the rest and putting into another GIA (on same platform as a&s ISA) that only has 1 fund (diverse Index fund) if only to simplify CGT calculations for future years.  Then the only years with multiple fund sales would be 2025-2026 tax year.  Future years would be sale of 1 fund only as the money is moved to the ISA. Assuming similar growth/loss to current Nutmeg GIA.  Or am I overthinking it? 

Thanks,

Yes.  In principle you started with £55k of money in which would be your base cost but let's say Nutmeg have made gains on deals of £2500 in each of the last two years then your current base cost would be more like £60k.

Usually you can tell by looking at your portfolio what the current base cost is - it should be the total of the Cost column.

I think the issue with selling the Nutmeg portfolio all at once is that you may be missing out on the benefit of the £3k annual allowance in the future years.  If you sell it all now and the gain is £19k then £16k is subject to CGT but if you spread the sales over 4 years then maybe only £7k is subject to CGT (or less if the bottom falls out of the market).

James19791

It's a monumental f**k up from me no doubt about it.  In a sense though it's a 'good' problem to have in that I'm only in this situation because my investment has grown. I'd much prefer a tax headache than a loss.   I'm still banking 76% of growth (more when allowance is utilised).  At least that's what I'm telling myself....