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Where Taxpayers and Advisers Meet

OEIC and CGT

Dave234
Posts:3
Joined:Tue Aug 18, 2020 9:53 am
OEIC and CGT

Postby Dave234 » Sat Apr 03, 2021 3:27 pm

I have investments in an OEIC fund which I buy and sell without drawing any money back into my personl bank account, sometimes held as cash in the OEIC fund for a period at bank interest rate. Are all the individual transactions subject to CGT each tax year or is CGT calculated only when I draw out funds into my bank account? I think I am correct in assuming that no CGT is due until I take some of the funds back to my own bank account. How is the dividend income treated? Annually as imncome or CGT when funds are taken out? Any help appreciated.

pawncob
Posts:4644
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: OEIC and CGT

Postby pawncob » Sat Apr 03, 2021 5:21 pm

https://www.money.co.uk/guides/what-are-oeics.htm
With a pinch of salt take what I say, but don't exceed your RDA

ben_power
Posts:52
Joined:Tue Feb 27, 2018 8:34 pm

Re: OEIC and CGT

Postby ben_power » Sat Apr 03, 2021 10:13 pm

Any capital growth when an investor sells or disposes of units/shares may be subject to Capital Gains Tax (CGT). This also includes fund switches. However, switches between different share classes within the same fund, for example switching between income and accumulation shares, are not treated as a disposal for CGT.

Tax is only payable where gains in the tax year exceed the annual CGT allowance (£12,300 in 2020/21). For individuals, the gain is added on top of their total income to determine the rate payable. Any part of the gain which falls within the basic rate tax band is taxed at 10% and the balance will be taxed at 20%.

I assume you hold your OEICs/Unit Trusts on a platform (Like Hargreaves Lansdown or Fidelity). If the total value of your fund/funds is less than £20,000 you should consider ISA wrapping then this issue will be removed.

Dave234
Posts:3
Joined:Tue Aug 18, 2020 9:53 am

Re: OEIC and CGT

Postby Dave234 » Sun Apr 04, 2021 3:15 pm

Thanks ben_power. I have an ISA, topped up by the maximum this year, and I know about the personal allowance for CGT. The OEIC is with Hargreaves in a "wrapper". You say that all sales "may" be subject to CGT. I undestand from your explanation that all my OEIC sales this year "will" be subject to CGT so must be reported to HMRC for the current tax year. The question was whether it makes any difference to CGT liability (and when it has to be paid) whether the money being reinvested (like an ISA would) remains in the wrapper or comes out to my personal bank account. Thanks for the information.

AGoodman
Posts:1205
Joined:Fri May 16, 2014 3:47 pm

Re: OEIC and CGT

Postby AGoodman » Tue Apr 06, 2021 5:01 pm

It makes no difference whether the cash is paid into your current account or stays in the account on the platform (e.g. HL). You have still disposed of an asset for CGT purposes.


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