CSH2 and new ISA Rules on MMF's

Corum_uk

So with the new ISA rules coming in next April and the stipulation that savers cannot have all their investments in MMF's if they want to avoid the taxman, I just wanted to double check that CSH2, being an ETF, is definitely not considered to be a form of MMF under the new rules, given it tracks the SONIA rate etc...

masonic

Nobody knows.

But there is a chance it won't be considered. I would not go as far as to say this is likely, but it is possible.

If it does end up being considered a MMF, then just hold a unit in ERNS alongside it. This is an ultra-short bond fund and not a MMF. WIth CSH2 having such a high share price, often people need something else to mop up the change.

aroominyork

Nobody knows.

And my guess is HMRC will not enlighten us. To cut a very long story short, CSH2 holds equities and uses swaps to generate SONIA-like returns. The fund manager says the distributions are therefore dividends and not income. HMRC doesn't take a view; they leave us to guess/work it out ourselves. But as masonic says, given the crazy guidance that anything other than 100% MMF is allowed, just buy tuppence worth of something else.

Corum_uk

OK thanks. I was thinking of opening a position in VWRP as well so that should avoid the 100% MMF restriction either way. Just hoping for a big crash or correction this year before jumping in.

Newbie_John

Seriously, just buy a single share of Tesco or whatever. That's all we know now.