ofset adviser costs against tax

Very interesting question and I guess the answer lies in what advice the adviser gives you! In general I think the answer is: no you can't. If you invest in UK shares the tax deducted is a notional tax and I don't see how you could set expenditure against that.

Management Companies of blocks of flats tend to have very large bank deposits which generate lots of Case III Interest. At one time they would try to set a proportion of their Accountancy Fees against that income. That was scuppered by the IR and I think you will be likewise scuppered!

Maybe if you were an Investment Company the answer would be different.

Indeed not. You can't set it against income because it's not a revenue expense. The adviser's fees are part of the acquisition cost of the shares and will play their part in the CGT calculation when you come to sell them. It's similar to how you would treat legal and survey fees in connection with the purchase of investment property, i.e. they are deducted from the gain.

IMHO, I'd agree with Ronald: if you go to an adviser, who then does a transaction for you:

- if the money you give to the adviser is part of the dealing as commission, it gets included in the costs for CGT purposes

- if you pay him money as fees outside the transaction, it's probably more difficult to get those costs against tax.

but then that brings in the fees/commission debate

Allan in North Yorks (IANAL or an IFA)

Why should it be more difficult? The purpose of the expenditure was to help you decide how and where to invest, and should be allowable (on the capital account, not revenue account) even if not tied in directly as commission.

This is similar to a survey for a property investment - the survey is not "part of the dealing" either.

In fact, I'd go further and say that if you incur pre-purchase survey and legal expenses and end up *not* buying the surveyed property for various reasons (such as being unhappy about some aspect of the property highlighted in the survey report), and then proceed to buy a different property instead, then *both* lots of expenses, including those related to the aborted purchase, should be allowable against the gains of the one actually bought.

Similarly, the IFA fees should be allowable *even if* you don't like what you hear and place no deals through him, but go to someone else.

Interesting Ronald.

What are incidental costs of acquisition and disposal? These are incidental costs that you incurred for the purpose of acquiring or disposing of the asset, such as

- fees, commission or remuneration paid for professional advice

- the costs of transferring the asset

- stamp duty

- the costs of advertising to find a buyer or seller

- the costs of any valuations needed to work out your chargeable gain (but not the costs of resolving any disagreement with the Inland Revenue about your valuations).

So it looks as though you are right.

Interesting thoughts: thanks for the ideas. Further dilemma:

a) I decide to sell some shares to crystallize the gain in the current tax year. I happen to like those shares, so wish to repurchase, whilst not getting it caught as a related transaction, so want to wait 30 days. My accountant says he'd be happy with repurchasing on such-and-such a date so that the repurchase is not connected with the sale. If my accountant decides to charge me for said advice (which he probably won't directly), could I set those fees off against the transaction to reduce the CGT?

I would think so

b) My stockbroker charges a mix of annual fee and commission. My accountant has no problem setting the commission against tax, but does not advise deducting the whole annual fee against tax (but would set a proportion and allocate to each transaction, but this makes it uneconomical to do).

I would suggest that the annual fee is covered by (your quote): "purpose of the expenditure was to help you [me] decide how and where to invest" then it should be deductible, but it's more of a grey area.

What do you think?

Allan

So would I, what does your accountant say? Seeing as he has commented on your stockbroker's fees, he shouldn't shirk from commenting on his own.

I don't think it helps you decide anything. The broker doesn't help you decide, he just acts on your instructions. I agree the annual fee seems to lie in a grey area, though the commission would be a clear case of dealing charges and therefore allowable. Could the annual fee be justified on the basis that not paying it would mean you would end up paying higher transaction charges? If so, it would seem justifiable to deduct them. But it would be hard to argue in support of this position if you paid the annual fees for many years in which no actual dealing took place. Better if you bought and sold stuff fairly regularly, i.e. every year with not many exceptions.