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Post by moonraker on Jul 29, 2023 10:27:22 GMT
Hargreaves Lansdown was quite keen that I convert the funds that I hold through it. It seemed a reasonably good idea so I gave the go-ahead. The process results in changes in the numbers of units held, though not the value. Rather late in the day I realised that this might make it more difficult to calculate gains and losses for tax purposes (not that I do this very often).
A private message to HL several days ago did not elicit a reply giving any advice, nor, so far, has one sent yesterday morning. I asked whether I would need to do a simple (?) arithmetical calculation or was there another method. (In the past I've received replies within a few hours of asking questions.)
The messages confirming that a fund has been converted give the old and new numbers of units held, eg:
Number of Jolly Sound Investment Bond fund - Class C - Income (GBP) shares previously held (Now cancelled): 30,463.16 shares
Merger rate (New : Old): 0.51170107 : 1
Number of Jolly Sound Investment Bond fund - Class Z - Income (GBP) shares credited in place of your previous holding: 15,588.03 shares
Harking back to my schooldays, I think that were I to sell 10,000 (new) shares, then to determine how many old units this represents I would need to use the formula: 10000:x::0.51170107:1 - giving a result of 19542.6599362 old units. (All those decimal places!)
And I suppose one would have to include the calculation in the notes that HMRC expect to be appended to one's return when declaring a gain or loss.
(Then there's the complication of gains and losses on reinvested dividends, which exercised me a year or two back, with two or three Forum members patiently enlightening me.)
Writing the above has helped my thought processes to become less muddy, but I would be interested in comments on the overall concept of fund conversions. And there may be something Blatantly Obvious that has eluded me.
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Post by mostlywrong on Jul 29, 2023 11:08:23 GMT
As my SIPP is with HL. and they have done the same to me, I feel for you!
But this is a SIPP so I don't have to report to anyone other than me. And my Quicken based accounts.
Your cost for CGT purposes is the total cost, including expenses, of the pool of units that you own.
The number of units might have changed but the total sum paid in will not have changed.
That sum is on HL.'s summary page (and I will check that later and report).
MW
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james100
Member of DD Central
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Post by james100 on Jul 29, 2023 11:14:14 GMT
I think you're overcomplicating it. I expect standard Section 104 rules apply. See HMRC link for detail. Total book costs and acquisition expenses apportioned over total (new number) units is your cost basis. Relevant fraction applied in event of fractional sale. And of course any reinvested divs and notional distributions (from accumulators) are also operative events and must be included in the S104. You should have records of every operative event available in case HMRC wants to inspect. www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2021#how-to-work-out-the-gain-for-shares-in-a-section-104-holdingFor simplicity's sake, once you've set up your S104, following disposal #1, it may be best not to purchase additional units...that way you maintain the originally calculated cost basis. HL shouldn't be providing you with tax advice as they are unauthorized to do so (as nor am I). So don't be surprised if they seem unhelpful. Sorry for long link, on my phone so can't edit. |
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Post by moonraker on Jul 29, 2023 13:54:03 GMT
I can see that it's still (relatively) simple to sell all of one's original holding plus re-invested dividends and declare the gain/loss, but what if one wants to sell only part of the original holding - perhaps desirable when the changes in Capital Gains allowances are being reduced so much?
I've been looking at my messages from HL confirming conversions have taken place, but only very recently has HL given the numbers for old and new units, as in my example in my opening post. Before that, it was just a bald announcement:"I am pleased to confirm that the following funds have now been converted..."
I really mustn't jump to conclusions but ... could it be that HL may have erred in not giving details of each conversion.
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Post by moonraker on Jul 30, 2023 19:25:15 GMT
It turns out that HL issues electronic contract notes reflecting old and new numbers of units for the conversions. I discovered this almost by accident - no mention of them in the messages confirming that particular funds have been converted. I spent an hour or two putting the details into a spreadsheet, which I then printed off. There would be no chance of a relative holding my power of attorney discovering the contract notes - and I wonder if a professional would know where they were?
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Post by mostlywrong on Jul 31, 2023 7:10:19 GMT
It turns out that HL issues electronic contract notes reflecting old and new numbers of units for the conversions. I discovered this almost by accident - no mention of them in the messages confirming that particular funds have been converted. I spent an hour or two putting the details into a spreadsheet, which I then printed off. There would be no chance of a relative holding my power of attorney discovering the contract notes - and I wonder if a professional would know where they were? Thanks, Moonraker. I didn't know that either!
I checked yesterday and found that several funds I own had been converted. The summary figures for the average cost appear to have been zeroed.
I will have to spend some time with Excel!
Thanks.
MW
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keitha
Member of DD Central
2024, hopefully the year I get out of P2P
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Post by keitha on Aug 1, 2023 10:22:33 GMT
Similar can happen with Shares turning 9 old into 2 new, or A taken over by B
example of second
I buy 7000 shares in NAIRDA at 1.00 (£7,000)
2 years later NAIRDA shares are worth 2.00 ( £14,000 )
Widget Co who are worth £5 buy NAIRDA on the basis of 3 Widget Shares for 7 NAIRDA
You end up with 3000 Widget shares worth £15,000 but they show as costing £15,000 not the real £7,000, and it gets worse if it's part cash part shares
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Post by moonraker on Aug 1, 2023 11:51:00 GMT
Still nothing back from Hargreaves Lansdown yet, though in the past it's been quick to reply some of my silly questions the same day as I asked. Disappointing, but not worth pursuing now I have found out for myself. Mostlywrong's comment above reassures me that I'm not the only one to be unaware of the contract notes.
I took out a few of my holdings more than 30 years ago, during which most have undergone several name changes and/or changes in structure. During a rare sell/buy exercise last year I think I got my calculations correct, but console myself that HMRC would be unable to any better, short of a forensic examination of my affairs.
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