For financial advisers only CAPITAL GAINS REPORTING TOOL

What is Capital Gains Tax (CGT)? How does it work? Examples CGT planning Old Mutual Wealth’s reporting tool Support material Disclaimer AGENDA

3 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)

4 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!

5 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

6 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) = 18% = £2,700 −£60,000 - £35,000 (£20,000 income + £15,000)= 28% = £7,000 = £9,700

7 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

8 PART DISPOSAL Original Capital Gain Withdrawal is % of original capital & gain

9 HOW DOES IT WORK? Part disposals The A over A plus B formula Purchase price = original investment or revised base value after previous part disposals B = value of remaining investment A = value disposed Purchase price A A + B X

10 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

11 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL What 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

12 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL What 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

13 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL What 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 to Old Mutual Wealth if query can not be resolved (normal contact route) −Standardised process to reconcile data and amend report

14 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL The 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

15 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL The 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

16 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL The notional disposal report −Provides a reports for part or full disposal mid year −Useful when considering advice mid year

17 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL The transactional history report −Breakdown of the data behind the CGT report should it be required

18 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

19 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL Re-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

20 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL Why 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)

21 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL Planning & 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)

22 OLD MUTUAL WEALTH’S CAPITAL GAINS REPORTING TOOL Planning & 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!

23 SUPPORT MATERIAL − −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

24 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.

25 This document is based on Old Mutual Wealth's interpretation of the law and HM Revenue and Customs practice as at September 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. 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 , and 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 , and respectively. VAT number for all above companies is October 2011