Tax on Fundsmith / Smithson

cooleyirl

New Member
Messages
4
Hello,

I am a long time reader of this site. As I cannot find the answer either on this site or elsewhere I decided to register to ask. Any help is appreciated.

I invested some money this year in Fundsmith (The GBP UK domiciled version) and separately in the the Fundsmith SICAV (Euro Luxembourg domiciled).

I am curious to know how these will be treated for tax. My understanding is that I will have to pay 40% tax on both when I sell them or after 8 years. Is this correct? Someone I know seems to think they are subject to Capital Gains Tax (33%) which I do not believe is the case. When the UK leaves the EU on 01 Jan 2021 will the tax treatment of Fundsmith (UK domiciled) change?

I am looking at investing some other money in Fundsmith's other product Smithson? Am I correct that this is subject to Capital Gains tax at 33% as it is an investment trust?

Thanks in advance.
 

Zebedee

Frequent Poster
Messages
150
Re smithson, your understanding is correct. It is an investment trust so it’s treated like an ordinary share.

I think that the fundsmiths are treated as you say (except exit tax is 41pc).
 

Zebedee

Frequent Poster
Messages
150
Re smithson, your understanding is correct. It is an investment trust so it’s treated like an ordinary share.

I think that the fundsmiths are treated as you say (except exit tax is 41pc).
Ps I’m not sure what U.K. treatment will be post brexit.
 

Lisboa

Frequent Poster
Messages
64
My general understanding is Funds are 41% and Trusts are 33%.

So Fundsmith taxed at 41% and Smithson taxed at 33%.

The Luxumbourg domiciled Fundsmith SICAV produced a PDF for Ireland based investors;

https://www.fundsmith.co.uk/docs/default-source/eu---irish-country-supplement/sicav-irish-country-supplement-eu.pdf?sfvrsn=4

I'm curious as to why you invested in both the UK and Euro funds? The portfolios are almost identical, so presumably it was to spread currency risk?

Do you see anything particularly special in Smithson, or is it just the fact that they follow the Fundsmith philosophy?
 

cooleyirl

New Member
Messages
4
Thank you for your reply also Lisboa. I had read that PDF you linked... just wanted to make sure it was in fact 41% (and not 33%) and I hadn't somehow misread it. The reason I decided to also invest in the UK domiciled Fundsmith was it is possible with the UK domiciled version to lodge a monthly amount via direct debit. This is not possible with the Luxembourg version.

I like the Fundsmith philosophy so that is why I am interested in Smithson. Additionally the fact that it attracts 33% Capital gains Tax vs 41% tax appeals to me. I do not want to invest further additional money into my pension at this point as it is already quite large. I have already considered that option is some detail.

It seems there a no few low-tax options for Irish investors apart from the very low return state savings options. As I am happy to accept a medium to high level of risk for the money I am willing to invest in Fundsmith / Smithson as my circumstances (own home outright, no dependents, defined benefit pension) lend itself to this kind of investment.

Presumably Ireland will have a double tax agreement with the UK which I believe will mean that Fundsmith will continue to attract 41% tax.
 
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