Investment Charges – Are you paying too much?


With the Retail Distribution Review’s findings altering charges associated with certain investment types, it is now likely that you are paying more for your investments than you need to. Until recently, cash rebates were used to reduce costs associated with managing investments. HMRC recently ruled however, that such rebates are taxable, leading investment distributors to share class the use of ‘Clean’ Share Classes which reduce on-going costs within the investment, increasing the value of the investment over time.


Simply said, Clean Share Classes have a lower annual management charge, meaning investors pay less. HMRC also recently issued a statement declaring that Capital Gains Tax (CGT) will not be payable when moving to a new clean share class within the same fund, although CGT may still be payable upon final disposal of the asset.


However, despite being more transparent, clean share classes are not without fault and great care must be taken to avoid costly mistakes (and for this reason we advise you to seek professional advice before proceeding).


If you act as a trustee it is vital that you consider the implications of not switching to clean share classes. As well as ensuring you are well advised on your choice of investments to avoid unnecessary taxes and fees you must comply with the trustee’s act 2000.


With such large scale changes in the wake of the Retail Distribution Review, sound financial advice has never been more important. For information on clean share classes, or for general financial planning advice contact Lee Salter on or call 01772 821021.


Moore and Smalley is authorised and regulated by the Financial Conduct Authority.