Intelligent Money - your investment questions answered
Discussion
paralla said:
"The lady" Who dear? Me Dear? How very dare you! I'm a gay, not a lady.
Cheers guys/gals/those yet you decide.
I'll give them a call.
Hi parallaCheers guys/gals/those yet you decide.
I'll give them a call.
Happy to help if I can just drop me a message at nik.burrows@intelligentmoney.com and we can set a call up whenever you are ready.
If I'm no help you can always blame Burwood,damlierv8, Mr Pointy and Gallons per mile, thank you for mention gents.
Cheers
Nik
Hi Mr Pointy
You need to sell down enough to realise the gain excluding a return of capital.
So to use your example if you had Invested £10k in PHR and it is now worth £16k you sell £16k down and have £6k of gain and £10k return of capital.
You had Invested £10k in PHE and it is now worth £14k you sell £14k down and have £4k of gain and £10k return of capital.
So to realise the full £10k gain you need to sell both holdings down.
The gain is calculated by portfolio rather than by wrapper so it is the gain made by disposal in each portfolio held rather than the total gain across the GIA.
To meet the 30 day criteria you only need to switch the assets to a different portfolio or into cash so they can still be held within your GIA.
If you switch the holdings out into an ISA the 30 day rule does not apply.
Cheers
Nik
You need to sell down enough to realise the gain excluding a return of capital.
So to use your example if you had Invested £10k in PHR and it is now worth £16k you sell £16k down and have £6k of gain and £10k return of capital.
You had Invested £10k in PHE and it is now worth £14k you sell £14k down and have £4k of gain and £10k return of capital.
So to realise the full £10k gain you need to sell both holdings down.
The gain is calculated by portfolio rather than by wrapper so it is the gain made by disposal in each portfolio held rather than the total gain across the GIA.
To meet the 30 day criteria you only need to switch the assets to a different portfolio or into cash so they can still be held within your GIA.
If you switch the holdings out into an ISA the 30 day rule does not apply.
Cheers
Nik
WHS Sell Down
Just to answer the questions about the WHS sell down.
The WHS holding in PHR was very close to its sale price on 21st Jan and was removed from the portfolio for new investment ready for sale at that time.
It subsequently fell in value overnight, so the trade was delayed to avoid selling too soon.
WHS remained as a holding for investment prior to 21st January but any investment after 21st January into PHR did not include WHS as part of the portfolio.
You will of now received payment for the sale of WHS holdings but any investment made after the 21st January did not include WHS so no payment is due for this period.
Just to answer the questions about the WHS sell down.
The WHS holding in PHR was very close to its sale price on 21st Jan and was removed from the portfolio for new investment ready for sale at that time.
It subsequently fell in value overnight, so the trade was delayed to avoid selling too soon.
WHS remained as a holding for investment prior to 21st January but any investment after 21st January into PHR did not include WHS as part of the portfolio.
You will of now received payment for the sale of WHS holdings but any investment made after the 21st January did not include WHS so no payment is due for this period.
Ian Lancs said:
Given the size of this thread, it's highly likely it's already here. But...
Is there an idiots guide to starting an ISA and the various options for using IM? (Numptie question!)
HI Ian, Is there an idiots guide to starting an ISA and the various options for using IM? (Numptie question!)
Drop me a message at nik.burrows@intelligentmomney.com and I'll be happy to help.
Cheers
Nik
CGT and the Annual Allowance.
A couple of questions about CGT so I thought it may be useful to outline the principles.
A Capital Gain is only assessed for tax when you sell the asset.
There is £12,300 per person allowance each year which means that the first £12,300 of gain is not taxed.
The annual allowance is a “use it or lose it” allowance so any gain that isn’t realised in a year rolls up into the next year but you only have one year’s allowance to use.
Simple Example
You invest £100,000 at the beginning of a tax year and it’s worth £112,300 at the end of the year. No sales or trades are made during the year.
If you do nothing, then there is no “realised gain” so no CGT to pay. You have £12,300 of retained gain.
At the end of year 2 it is valued at £124,600 and you decide to sell it down.
You now have £24,600 of realised gain, the first £12,300 is free from tax and you must pay Capital Gains Tax on the additional £12,300 of gain. In this case you have two years of gain but only 1 years of allowance.
If at the end of year 1 you sold down you would have a realised gain of £12,300, this is free from tax due to your allowance.
If you then re-invest the £112,300, 30 days later your new base is £112,300
At the end of year 2 the value is £124,600 you decide to sell down, the realised gain for the year is £12,300 no CGT to be paid. So by manging your account you have taken account of each years gain separately and so been able to use two years of allowance.
Two simple ways of making use of the CGT allowance are to sell down £20,000 of GIA assets at the end of the tax year and then use this £20,000 to fund your ISA for the next tax year. There is no need to wait 30 days for this transaction so you can sell the GIA funds down at the end of one tax year and then set your ISA up at the beginning of the next year.
The 2nd option is to switch funds out of one portfolio into another or into cash. Hold it in the new location for 30 days and then transfer it back. i.e. move funds from Index 80 to Optimum Global Growth and then move them back to Index 80 after 30 days.
Wrinkles
There will always be some level of realised gains in a portfolio as holdings are sold to re-balance. With a portfolio like PHR there have been realised gains each time a holding has been sold down.
We are working on adding the gains information to your dashboard so you will see both the retained and realised gains that your portfolio has.
Last bit, in calculating how much of the portfolio to sell down to realise the gain you need to take account of the fact that on sale some of the return is your original investment and some of it is gain.
Example
GIA value is £150,000
Retained Gain is £35,000
You just want to Realise £12,300 of gain to use your allowance
Work out the % of gain you need 12,300/35,000 = 35.14%
You need to realise 35.14% of your holding so £52,710
Previous Years Losses
You can off-set losses from other investments against gains and you can carry forward losses from the previous 4 years.
Hope this helps, please just drop me a message at nik.burrows@intelligentmoney.com
If you need a gains summary for the year so far please mail Coops at steve.cooper@intellignetmoney.com
Cheers
Nik
A couple of questions about CGT so I thought it may be useful to outline the principles.
A Capital Gain is only assessed for tax when you sell the asset.
There is £12,300 per person allowance each year which means that the first £12,300 of gain is not taxed.
The annual allowance is a “use it or lose it” allowance so any gain that isn’t realised in a year rolls up into the next year but you only have one year’s allowance to use.
Simple Example
You invest £100,000 at the beginning of a tax year and it’s worth £112,300 at the end of the year. No sales or trades are made during the year.
If you do nothing, then there is no “realised gain” so no CGT to pay. You have £12,300 of retained gain.
At the end of year 2 it is valued at £124,600 and you decide to sell it down.
You now have £24,600 of realised gain, the first £12,300 is free from tax and you must pay Capital Gains Tax on the additional £12,300 of gain. In this case you have two years of gain but only 1 years of allowance.
If at the end of year 1 you sold down you would have a realised gain of £12,300, this is free from tax due to your allowance.
If you then re-invest the £112,300, 30 days later your new base is £112,300
At the end of year 2 the value is £124,600 you decide to sell down, the realised gain for the year is £12,300 no CGT to be paid. So by manging your account you have taken account of each years gain separately and so been able to use two years of allowance.
Two simple ways of making use of the CGT allowance are to sell down £20,000 of GIA assets at the end of the tax year and then use this £20,000 to fund your ISA for the next tax year. There is no need to wait 30 days for this transaction so you can sell the GIA funds down at the end of one tax year and then set your ISA up at the beginning of the next year.
The 2nd option is to switch funds out of one portfolio into another or into cash. Hold it in the new location for 30 days and then transfer it back. i.e. move funds from Index 80 to Optimum Global Growth and then move them back to Index 80 after 30 days.
Wrinkles
There will always be some level of realised gains in a portfolio as holdings are sold to re-balance. With a portfolio like PHR there have been realised gains each time a holding has been sold down.
We are working on adding the gains information to your dashboard so you will see both the retained and realised gains that your portfolio has.
Last bit, in calculating how much of the portfolio to sell down to realise the gain you need to take account of the fact that on sale some of the return is your original investment and some of it is gain.
Example
GIA value is £150,000
Retained Gain is £35,000
You just want to Realise £12,300 of gain to use your allowance
Work out the % of gain you need 12,300/35,000 = 35.14%
You need to realise 35.14% of your holding so £52,710
Previous Years Losses
You can off-set losses from other investments against gains and you can carry forward losses from the previous 4 years.
Hope this helps, please just drop me a message at nik.burrows@intelligentmoney.com
If you need a gains summary for the year so far please mail Coops at steve.cooper@intellignetmoney.com
Cheers
Nik
pingu393 said:
Simpo Two said:
maccboy said:
What is the situation if the capital gain is more than £12k? Does the whole fund have to be sold, or can part of it be sold to take advantage of the £12.3k allowance?
You can sell as much or as little of PHE as you want. The hard part is working out how much to sell to utilise the CGT allowance because part of it is return of capital not gain. I think it's pro rata but happy to be corrected.If you know what you have invested, anything above that is gain. It is this gain that needs to be kept below £12,300.
As I understand it, it is each fund that is measured, not the whole GIA.
So, if you have a £6k gain in PHE and a £6k gain in PHR, there is no action required yet.
If you have a £12k gain in PHR, it's time to do something about it.
The realised gain is on all investments so in your example it is the GIA that is assessed not the individual portfolios.
If you invested £20,000 in your GIA and it is now worth £36,000 you have £16,000 of gain.
CGT is only payable on the assets that you realise so if you realise £12,300 of gain to use your allowance and pay no CGT you then carry £3,700 gain over into the next tax year.
Nik
Mr Pointy said:
Intelligent Money said:
Wrinkles
There will always be some level of realised gains in a portfolio as holdings are sold to re-balance. With a portfolio like PHR there have been realised gains each time a holding has been sold down.
We are working on adding the gains information to your dashboard so you will see both the retained and realised gains that your portfolio has.
Nik, can you just clarify something around the issue of realised gains & distributions.There will always be some level of realised gains in a portfolio as holdings are sold to re-balance. With a portfolio like PHR there have been realised gains each time a holding has been sold down.
We are working on adding the gains information to your dashboard so you will see both the retained and realised gains that your portfolio has.
1) If I have £3000 of realised gains & £3500 of retained gains then without me actually doing anything by way of selling down funds in my GIA I've used up £3500 of my allowance this year & I'll get a CGT certificate after April 6th showing this amount. If so I need to be careful that I don't realise more than £9300 elsewhere.
2) Are there any distributions associated with IM funds which are not capital gains but are subject to tax? I've had this with other funds where I got a tax certificate at the end of the tax year which had to be declared as income/interest.
In this scenario you have used £3,000 of your allowance (the realised gains) and £3,500 of gain is carried over and isn't counted as a gain until you sell it down or switch it.
There is small amount of income and dividend return generated in the portfolios. This is declared in the end of year tax certificate that we supply.
Nik
pingu393 said:
Intelligent Money said:
Hi Pingu,
The realised gain is on all investments so in your example it is the GIA that is assessed not the individual portfolios.
If you invested £20,000 in your GIA and it is now worth £36,000 you have £16,000 of gain.
CGT is only payable on the assets that you realise so if you realise £12,300 of gain to use your allowance and pay no CGT you then carry £3,700 gain over into the next tax year.
Nik
Nik,The realised gain is on all investments so in your example it is the GIA that is assessed not the individual portfolios.
If you invested £20,000 in your GIA and it is now worth £36,000 you have £16,000 of gain.
CGT is only payable on the assets that you realise so if you realise £12,300 of gain to use your allowance and pay no CGT you then carry £3,700 gain over into the next tax year.
Nik
Many thanks for the two posts above.
Can you please confirm how much I need to withdraw from the example GIA in order to realise the £12,300 gain?
The total gains is £16,000 and you want realise £12,300 so 12300/16000 gives you 76.87% of the gain
You need to "move" 76.87% of the GIA, £36,000 X 76.87% = £27,673
Cheers
Nik
rockin said:
A couple of points,
Even if your gains are less than £12,300 you still have to do the CGT pages of self-assessment for HMRC if your total proceeds of sale exceed £49,200.
If you sell, say, £150k of investments to realise gains of £12k and intend to buy back the same investment after 30 days you're running a lot of "out of market" exposure for not much tax saving.
Hi Rockin, Even if your gains are less than £12,300 you still have to do the CGT pages of self-assessment for HMRC if your total proceeds of sale exceed £49,200.
If you sell, say, £150k of investments to realise gains of £12k and intend to buy back the same investment after 30 days you're running a lot of "out of market" exposure for not much tax saving.
A good point it is always good to balance the tax advantages against the investment objective and take a balanced view, not letting a tax solution pull you away from your original plan.
You should also consider that you don't have to be out of the market, you just need to be in a different market.
Nik
Edited by Intelligent Money on Thursday 18th March 09:35
stevemcs said:
Is Nik in ? I emailed him saturday (no i don't expect him to work weekends 
) I just wanted to make sure he received them email
Hi Steve ) I just wanted to make sure he received them email Apologies to all those waiting for replies I am working through mails and catching up as quickly as I can, busy time with tax year end, PHR meetings and CGT questions!
Hoping to build lower performing portfolio next year to reduce the CGT liabilities!!
Cheers
Kingdom35 said:
Hi All
Whats peoples thoughts on IM100 Index Fund? I can see there is a charge of 1.5% to transfer the money into this fund, is that still the case if were through the PH Code original route?
Looking for a bit of diversification as predominantly i have 40% PHE, 40% Global Growth and 20% PHR. Looking to move some into IM100.
I can see historically this hits 20% 1 year, 43% 3yrs and so on but what about in the last 6mths for instance.
Hi Kingdom35Whats peoples thoughts on IM100 Index Fund? I can see there is a charge of 1.5% to transfer the money into this fund, is that still the case if were through the PH Code original route?
Looking for a bit of diversification as predominantly i have 40% PHE, 40% Global Growth and 20% PHR. Looking to move some into IM100.
I can see historically this hits 20% 1 year, 43% 3yrs and so on but what about in the last 6mths for instance.
There is no charge for switching between portfolios so no exit fees and no entrance fees. As a PH'r no fees fee adding new money either.
Cheers
Nik
joshe90 said:
Thanks Nik, is it best to wait for this to be available then before moving any money out of my GIA into an ISA?
Hi Joshe90If you want to GIA to ISA now we have a work around in the meantime.
1. Request the sell down of the amount you want to transfer, to Cash in your GIA
2. Either apply for an ISA if you don't have one and create a single contribution OR if you already have an IM ISA add a single contribution to your ISA
3. Drop me an e-mail at nik.burrows@intelligentmoney.com and as soon as the cash is available in your GIA we will transfer it across to your ISA for you.
Cheers
Nik
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