Capital gains tax planning – Investment Accounts

• Update acquisition costs for re-registered assets from other providers
• Identify clients who have exceeded the capital gains allowance or who can report a loss to HMRC
• Consider the fee disinvestment strategy for Investment Accounts
• Consider how assets within Investment Accounts are held (either jointly or in sole name).

For our capital gains reports to produce accurate figures for assets re-registered to our platform, the original acquisition costs need to be entered into our system. The beginning of the new tax year is a good time to perform this task for clients who have re-registered assets to the platform over the last year or so.

Next steps
 

• To update acquisition costs, simply locate the client by selecting ‘Servicing’ from the blue menu bar that appears when you first log into Client Management (alternatively select from ‘Recent’ if you have recently viewed their accounts).
• You can access the ‘Update acquisition cost’ facility from your client’s Investment Account by opening up the ‘Capital Gains summary’. 

Clients will usually have to pay capital gains tax on their overall gains above their tax-free allowance (£6,000 in 2023/24, reduced to £3,000 for 2024/25). The good news is, it’s possible to carry forward any capital losses to offset chargeable gains in future tax years. These losses have to be reported to HMRC within four years.

Our realised gains report quickly identifies clients that have either exceeded the annual exempt amount or who are able to report a loss to HMRC.

Next steps:

• Run a realised gains report:
  • A bulk report can be downloaded and shows all clients who have incurred a loss
  • An individual client report can be downloaded and identifies the loss at a fund level.

To run a bulk report, select ‘Servicing’ from the blue menu bar that appears when you first log in, and you’ll see an option for ‘Bulk Capital Gains report’. From here, you can download a realised or unrealised gains report via PDF or CSV.

To produce an individual report, simply locate the client and, from their Investment Account, open up the ‘Capital Gains summary’. There you’ll have the option to ‘Generate Capital Gains report’.

If you need more help with using our Capital Gains reports, you may find it useful to download our guide.
 

• Consideration could also be given to moving unwrapped assets into an ISA, as appropriate.

Any capital gains tax (CGT) liability needs to be considered when a client sells assets within an Investment Account. This includes sales made to fund fee payments. Therefore, where CGT may be an issue, consideration should be given to whether it’s appropriate for a client’s fees to be paid through asset sales within the Investment Account. If need be, either the client’s Product Cash Account or Cash Management Account can be set as the first port of call for the payment of fees (the client can easily make top ups to these accounts themselves though their online account or via the Fidelity App).

Next steps

• Identify clients who may have a potential CGT liability by running an unrealised gains report. To run an individual report, simply locate the client from their Investment Account, open up ‘Capital Gains summary’ where you’ll have the option to ‘Generate Capital Gains report’.

If you need more help with using our Capital Gains reports, you may find it useful to download our guide.
 

• Where appropriate, set fees to be paid from the client’s Product Cash Account or Cash Management Account. To do this, click ‘View details’ within the client summary to view the current fee set up. From the ‘Actions’ tab, select ‘Manage fee funding’ where you can change the payments from the ISA/Investment Account to the Cash Management Account.
• Consider whether the client needs to top up their Product Cash Account or Cash Management Account.

Capital gains tax is charged at either 10% for basic-rate taxpayers or 20% for higher or additional-rate taxpayers (higher rates apply to gains on residential property). Therefore, where married couples or civil partners are in different tax bands and one or both have exceeded the annual exemption limit - or one has an unused allowance - it may be appropriate to consider transferring unwrapped assets to the other party. Consideration should also be given to jointly-held assets, where the gain calculation is based on each individual’s share of the asset.

Our realised gains report can quickly pinpoint clients that have exceeded the annual exempt amount, which may help you identify clients where transferring assets to their partner may be an appropriate course of action.

Next steps

• Update CGT acquisition costs online following a stock transfer, as appropriate (please see first point above).
• Run a realised gains report to identify clients who have exceeded the annual exemption limit. To run an individual report, simply locate the client, and, from the client’s Investment Account, open up the ‘Capital Gains summary’ where you’ll have the option to ‘Generate Capital Gains report’.

If you need more help with using our Capital Gains reports, you may find it useful to download our guide.