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HMRC drops CGT charge on clean share class switches


HM Revenue & Customs has amended legislation to remove capital gains tax charges when selling down bundled assets to move into a clean share class.

A change in legislation means any capital gains tax charge will be rolled over until final disposal of the assets.

An HMRC spokesman says: “The changes have the effect of treating the new share class issued as the same asset as the old for which it was exchanged. This means that any CGT charge is rolled over until final disposal of the new share class holding.

Prior to the amendment, selling down assets in a bundled share class to buy into a clean share class in the same fund could carry a CGT charge.

HMRC confirmed in a briefing note in March that all rebates from asset managers to investors would be subject to income tax from April.

This has prompted a move towards clean share classes. HMRC says it has made the changes to help facilitate the move.

A number of platforms including Standard Life and Hargreaves Lansdown have sounded their intention to secure preferential share classes from fund managers at lower prices than the rest of the market.

Investment Quorum chief executive Lee Robertson says: “This is great news. I think it is a pragmatic statement by HMRC to introduce some welcome certainty. There had been some uncertainty regarding capital gains tax with the increasing move to clean share classes but this makes things a bit more straight forward for advisers and their clients.” 

Skandia UK managing director Peter Mann says: “This is a sign of a listening organisation and will aid the transition to clean share classes as we move forward.”


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