Equities-based portfolios are being targeted by spread betting firm Spreadex through a new service intended to reduce exposure to CGT, stamp duty and commission costs.
The service works by offering investors the ability to gear their holdings via a spread bet, while still cashing in the majority of their holdings – and potentially gaining future returns free of CGT and other costs.
The example given by Spreadex is as follows:
- An investor has 100,000 shares in a company, quoted at £1.99-£2.01 on the stock market; selling the shares would result in some £199,000 less broker commission.
- The service enables the investor to transfer the shares to Spreadex in return for £179,100; the remaining 10% of the value of the shares becomes a margin deposit with Spreadex as part of a spread bet; if the shares move down in value the margin deposit call may be increased; if the shares move up the investor stands to gain £1,000 per penny change on the basis the bet consists of 100,000 shares; if the shares increase in value by 30p, the investor stands to gain £30,000 free of CGT, stamp duty and commission.
Spreadex adds the 10% deposit is held in a “segregated client money account protected under FSA rules”.
IFAonline is seeking additional comment from Spreadex as to whether the new service will target investors through intermediaries or strictly on a direct sales basis, and whether the service requires a minimum portfolio value before it will accept the transfer of shares.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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