Incidental costs

27 May 2014

Issue: 4453 / Categories: Forum & Feedback , Capital Gains

Following the retail distribution review, a separate fee is paid to financial advisers for their investment advice. This may be shown as an “initial charge” and not included in the full costs of an investment portfolio

Traditionally if a client asked an independent financial adviser (IFA) to help her invest a sum of money in an open-ended investment company (OEIC) the IFA’s fees would be paid by the OEIC. So if she invested £500 000 in a portfolio of funds she would receive a statement of costs which added up to £500 000.

That would clearly be her total capital gains tax base cost and the statement would split it between the individual fund holdings. Following the retail distribution review she may now pay her IFA a separate fee or receive a statement of costs adding up to £490 000 with a separately identified “initial charge” of £10 000 shared between the IFA and the platform through which her portfolio is held.

Does this change the capital gains tax position and is it permissible to apportion the fees and charges...

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