For financial advisers only

CAPITAL GAINS REPORTING TOOL

What is Capital Gains Tax (CGT)? How does it work?ExamplesCGT planningOld Mutual Wealth’s reporting tool Support materialDisclaimer

AGENDA

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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 within

five years of loss but carried forward indefinitely)

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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!

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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

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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

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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

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PART DISPOSAL

OriginalCapital

Gain

Withdrawal is % of original capital & gain

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HOW DOES IT WORK?

Part disposals

The A over A plus B formula

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

B = value of remaining investment

A = value disposed

Purchase price

A

A + BX

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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 x A/A+B =

Gain = £10,000 – £9,090 = £910

£100,000 x £10,000 = £9,090

£10,000 + £100,000

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLWhat 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

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLWhat 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

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLWhat 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

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLThe 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

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLThe 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

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLThe notional disposal report

− Provides a reports for part or full disposal mid year − Useful when considering advice mid year

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLThe transactional history report

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

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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

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLRe-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/

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLWhy 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)

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLPlanning & 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)

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OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOLPlanning & 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!

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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

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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.

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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 authorised by 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