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CAPITAL GAINS REPORTING TOOL. For financial advisers only. AGENDA. What is Capital Gains Tax (CGT)? How does it work? Examples CGT planning Old Mutual Wealth’s reporting tool Support material Disclaimer. WHAT IS CAPITAL GAINS TAX (CGT)?.

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Capital gains reporting tool

CAPITAL GAINS REPORTING TOOL

For financial advisers only


Agenda

AGENDA

What is Capital Gains Tax (CGT)?

How does it work?

Examples

CGT planning

Old Mutual Wealth’s reporting tool

Support material

Disclaimer


What is capital gains tax cgt

WHAT IS CAPITAL GAINS TAX (CGT)?

CGT is a tax charged on gains on the disposal of an asset

The tax rate is 0%,18% or 28%

Losses can be offset against future gains (need to be registered withinfive years of loss but carried forward indefinitely)


How does it work

HOW DOES IT WORK?

Calculation

  • Disposal proceeds

  • Minus any incidental disposal costs

  • Minus acquisition costs

  • Minus any incidental acquisition costs

  • Minus any allowable enhancement costs

  • Minus costs of establishing title

    =

    Gain or Loss!


How does it work1

HOW DOES IT WORK?

Annual exempt amount (AEA)

£10,600 of gain relievable at 18% or 28%

Depends on individual’s other taxable income (not just CGT)

AEA – increase year on year (RPI from 2011/12)

Use it or lose it allowance


How does it work2

HOW DOES IT WORK?

An example – post-budget 2010

George has £20,000 income after personal allowance

£50,600 gain

£10,600 AEA

£50,600 - £10,600 = £40,000 gain

£40,000 + £20,000 (income) = £60,000

£35,000 (BRT threshold) - £20,000 (income) = £15,000 @ 18% = £2,700

£60,000 - £35,000 (£20,000 income + £15,000)= £25,000 @ 28% = £7,000

= £9,700


How does it work3

HOW DOES IT WORK?

Withdrawals

Section 104 holding and regular withdrawals

Replaces the last in first out rules

Brings old gains forward

Wider considerations when selling an asset

Aggregate acquisition price

Only one disposal cost

Need to consider same assets held on and off platform


Part disposal

PART DISPOSAL

Withdrawal is % of original capital & gain

Original

Capital

Gain


How does it work4

HOW DOES IT WORK?

Part disposals

TheAoverAplusB formula

Purchase price = original investment or revised base value after previouspart disposals

Purchase price

A

A + B

X

A = value disposed

B = value of remaining investment


How does it work5

HOW DOES IT WORK?

An example

£100,000 investment x 10% growth

Value end of year 1 = £110,000

Take £10,000 withdrawal

Original base cost xA/A+B=

£100,000 x £10,000= £9,090

£10,000 + £100,000

Gain =£10,000 – £9,090 = £910


Old mutual wealth s capital gains reporting tool

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

What does it offer?

Selection of reports

Adviser access only (no client access)

CIA holdings only

Individual, Joint, Trustee and Corporate cases

Shows gains and losses with no assumption of ownership split

No assumption made of available exemptions or losses

Reports gains and losses not tax owed

Provides individual reports per CIA holding

Ability to change “take on” position for re-registration cases


Old mutual wealth s capital gains reporting tool1

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

What the reports include

Deductions for charges and payment of nominated trail

If you have 10 funds and nominated trail is paid on each fund, this is 120 transactions in one year

SIC is shown as two deductions

Re-invested income impacts 104 holdings on income units

Accumulation units acquisition price increase for CGT purposes on reinvestment of notional income distributions


Old mutual wealth s capital gains reporting tool2

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

What the reports include

Important information relating to report outputs

100,000+ accounts

24,000,000+ transactions

Over 95% reconciliation

Small % may create reconciliation queries

Save report and e-mail to Old Mutual Wealth if query can not be resolved (normal contact route)

Standardised process to reconcile data and amend report


Old mutual wealth s capital gains reporting tool3

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

The available reports

Capital gains – report for previous tax year (eg 2010/11)

Notional disposal – report showing tax position for part or full disposal mid tax year

Transaction history – for capital gains report for previous tax year

What if – disposal planning report to maximise tax opportunities

All reports need to be saved locally by adviser


Old mutual wealth s capital gains reporting tool4

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

The capital gains report

Automatically provided annually by Old Mutual Wealth after tax-year end (circa June) and saved

Can also be requested by adviser at any time during the year (save locally)

Provides report showing tax position for previous tax year (eg 2010/11)

Gains or losses for tax-year end

The data required for completion of self assessment


Old mutual wealth s capital gains reporting tool5

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

The notional disposal report

Provides a reports for part or full disposal mid year

Useful when considering advice mid year


Old mutual wealth s capital gains reporting tool6

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

The transactional history report

Breakdown of the data behind the CGT report should it be required


Old mutual wealth s capital gains reporting tool7

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

‘What if’ scenarios

Ability to review holdings and plan disposals

Maximise tax planning

Will calculate gain or loss position on specific holdings

Multiple planning scenarios (sell one fund / multiple funds or percentage of certain funds etc)

Excellent advice point


Old mutual wealth s capital gains reporting tool8

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

Re-registration cases

Ability to input ‘take on’ position for re-registration and migrated cases

Figures shown represent values at re-registration

Take on position should represent revised 104 holdings (inc units) and uplift in acquisition price for reinvested notional income distributions (acc units)

Old Mutual Wealth is unable to provide historic view

More details can be found at www.oldmutualwealth.co.uk/adviser/CGTreporting/


Old mutual wealth s capital gains reporting tool9

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

Why does it not calculate tax?

Old Mutual Wealth does not know:

if the client has used some or all of their annual exemption

if the client has other losses in that tax year to use or carry forward

if the client has the same holdings held directly or on another platform which will impact their section 104 holdings

the tax rate suffered depends on the client’s income tax rate

Impact of any repurchases (bed and breakfast rules)


Old mutual wealth s capital gains reporting tool10

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

Planning & advice points

Try to use annual exemption (cost efficiently)

Consider part disposals using allowance on gains to make up income shortfalls

Create losses in following tax year if gains also being realised

Remember bed and breakfast rules (30 days)


Old mutual wealth s capital gains reporting tool11

OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL

Planning & self assessment

Paper file required by 31st October

Online file required by 31st January

CGT payable by 31st January following the tax year the gain was realised

Gains or losses are recorded on SA108 (Capital gains summary form) alongside SA100 (Tax return form)

Remember – less than 150,000 individuals are expected to pay CGT in 2010/11, which represents 0.25% of the population assuming 60m people!


Support material

SUPPORT MATERIAL

www.oldmutualwealth.co.uk/adviser/cgtreporting/

Presentation, video, user guides and Q&A’s are available

If initial queries are not solved by the support material please contact Old Mutual Wealth through normal channels


Cgt tool disclaimer

CGT TOOL DISCLAIMER

Whilst Old Mutual Wealth has endeavoured to provide accurate data we cannot guarantee that the calculations are correct. Consequently they should be regarded as indicative only. Whilst we believe these reports to be of assistance, we can not accept any liability for any errors or omissions in the computations. Accordingly we recommended you that you should consult your accountant or tax adviser.


Capital gains reporting tool

This document is based on Old Mutual Wealth's interpretation of the law and HM Revenue and Customs practice as at September 2011. We believe this interpretation is correct, but cannot guarantee it. Tax relief and the tax treatment of investment funds may change.

This communication is designed for and directed at professional financial advisers. It should not be relied on by consumers.

www.oldmutualwealth.co.uk

Calls may be monitored and recorded for training purposes and to avoid misunderstandings.

Old Mutual Wealth is the trading name of Old Mutual Wealth Limited which provides an Individual Savings Account (ISA) and Collective Investment Account (CIA) and Old Mutual Wealth Life & Pensions Limited which provides a Collective Retirement Account (CRA) and Collective Investment Bond (CIB).

Old Mutual Wealth Life Assurance Limited, Old Mutual Wealth Limited and Old Mutual Wealth Life & Pensions Limited are registered in England and Wales under numbers 1363932, 1680071 and 4163431 respectively. Registered Office at Old Mutual House, Portland Terrace, Southampton SO14 7EJ, United Kingdom.

All companies are authorisedby the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Their Financial Services register numbers are 110462, 165359 and 207977 respectively.

VAT number for all above companies is 386 1301 59.

211-4206 October 2011


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