Is a conversion of share class subject to CGT?

ParaP

Hi all,

Wondering if someone can clarify something for me or guide me in the right direction.

A client has multiple funds held with the individual providers. Approx 20 different funds held all over the place.

The adviser wants to convert the share classes of the fund prior to an in-specie to a platform.

My question is when is a conversion of share class subject to CGT if at all?

Thanks

DanAtkinsonUK

If done properly it shouldn't be. However you need to check the exact process with each platform to ensure that their reporting tools give you the correct base costs post conversion.
E.g. I recall doing this on Elevate and having to do individual fund switches on each.

Abrahaj123

Hi,
We have a client with a Collective Account that we are moving to an alternative platform. The new platform does not have the "Acc" version of some of the funds we are looking to re-reg, only the "Inc" and therefore the receiving platform cannot accept the re-reg.
Am I correct in saying that if we switch from the "Acc" to the "Inc" on the existing platform that this is not subject to CGT? We can then move to the new platform without realising any gains...?
Likewise, if we have a client in Acc funds and they are looking for the natural income to be paid out, can we switch them to Inc units without crystallising CGT?
Is there a straight answer to this or is it a bit "grey"??

benjaminfabi

It will basically depend on whether the units being switched between are part of the same sub-fund.

If they are, then there won't be a disposal. this is a conversion

If they aren't, there will be a disposal. this is a switch

Take a look at the full prospectus for each fund you are holding and see if the share class you want to use is in the same sub-fund. Mostly, they should be and this is generally easy to find out.

The exception is when switching between hedged/unhedged share classes. These are always treated as switches, not conversions.

Abrahaj123

Thanks Benjamin.
I have checked the prospectus and it appears that the funds in question can be converted.
Next task, find out how to request a conversion, not a switch, on said platform, and find out how long it is going to take!!

parawhat

Ring the platform and ask them to do the conversion for you (assuming they can).

If you just carry out a switch as normal on the platform this won't be treated as a 'conversion', even if you switch from, say, a dirty to a clean share class of the same sub fund.