Transferring From DriveWealth to FreeTrade (DriveWealth)?

Hi All,

I recently received a notification from DriveWealth that they are discontinuing their self-directed investing account product with individual investors. This is nothing to do with FreeTrades relationship with DriveWealth.

They have told me I need to liquidate my fractional shares and move the funds out to close the account.
I asked them for a list of Front end partners they still work with so I can investigate if it is possible to initiate a DriveWealth to DriveWealth transfer, hoping that I can avoid liquidating and having to pay the Cap Gains.

I am hoping Freetrade might have a migration path to Shepard all the Drivewealth lost souls looking for a new home and since FT use Drivewealth already, the internal transfer might be straight forward :pray:

I opened an account with Drivewealth in 2016 to start a long term investment portfolio for my Nephew/Godson, investing in companies he would know, Disney, Apple, Paypal, Google, Hasbro etc. which is why I would like to find away to continue this portfolio without interruption. To teach the lesson of the power of long term compounding interest coupled with dollar cost averaging.

Thanks in Advance

Paul

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The best thing that you can do is contact Freetrade directly via the in app help or via the email help. If a transfer is possible Freetrade will do the transfer for you.

For anyone else - this is a piece of generic advice. If you want to transfer brokers instruct the new broker to transfer. The new broker will inform you if it is possible. It will also tell you if some particular stock is not transferable as the new broker doesn’t support it. In this-non transferable case it will provide you with options including liquidation of asset(s) and transfer of the proceeds.

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Hi Bitflip,

Thanks for the response. I have emailed the FreeTrade support email for transfer info. I was also checking with the FT community to see if any FT users have been through the process have transferring a portfolio of fractional shares from DriveWealth Native to FreeTrade/Drivewealth. The stocks are very main stream
Disney, Paypal, Apple, Amazon, Nvidia, MasterCard, Hasbro, Activision, Tesla, Google.

I am hoping this will be a simple account transfer within Drivewealth and an easy way for FT to pick up new customers who have been dumped out of Drivewealths discontinued self directed native product.

The other DriveWealth partner I have been looking at is Stake UK.

Thanks

Paul

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Hi All,

FreeTrade Support got back to me and confirmed there is no migration path from Drivewealth to FT/Drivewealth. So I will continue my search.

Thanks

Paul

I might be wrong but I heard someone that if you buy a stock and then repurchase it within 30 days it counts as if you never sold it.

So that could apply here? Maybe speak to an accountant

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If the motive for this approach is to minimise CGT I recommend you speak to an accountant ( spoiler : it won’t work )

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Thinking out loud. Could you buy the equivalent shares to obtain a square number of full shares?

Not always possible but hey, it’s an idea

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I think it’s worth noting that the strategy you’re describing used to be a legal method for minimising the long term capital gains liaility, then it was outlawed with the introduction of the 30-day disposal rules. You can read about it by searching for “Bed and breakfasting”. Given you’re not trying to avoid or minimise capital gains taxes over the long term, you’re just trying to avoid disposing of the asset in the short term (which as a consequence would trigger a tax liability), I think the sale and repurchase within the 30 days cut-off would actually be a non-taxable event.

I am not an accountant so I echo the advice above of speaking to a tax professional if the amounts involved are meaningful, but in principle, selling and then repurchasing within a couple of days at a different broker is not disposal and is not taxable.

That said, I recommend reframing the question when you do talk to tax professionals or HMRC: “My broker is closing down and I’m unable to transfer directly, is it okay if I sell and then repurchase immediately with a different broker? I do not want to dispose of the assets”. Your current framing (i.e: avoiding capital gains tax) invokes bed and breakfasting (which is not your intent).

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Thanks for your response s_m. That’s great input. I will speak to an accountant about this approach.

Hi Samantha,

Its a good suggestion. The stocks in the portfolio have fairly high individual share prices, a few examples Amazon $3,294 Google $2,830, so It will cost a bit to round up the fractions.

But I will round up the fractions to get an idea of how much that will be.

Thanks

Paul

Hi Jim,

Thanks for the feedback. The motivation is not to sell for 10+ years :smiley: If I cant find away to transfer the fractional stock portfolio, then I will try and utilize the CGT exemption to maintain as much of the gains and re-invest as quickly as possible to continue on.

Thanks

Paul

Thanks Secure

I did not know that you could sell and re-buy within 30 days and avoid cap gains tax. That would be perfect for my situation, which essentially is looking like I will be forced is sell due to a discontinued account type. I will look into it.

Thanks

Paul

Be careful with that approach - if you’re rebuying the same shares within 30 days and not using an ISA the gain will not be crystallised and CGT when you come to sell will be based on your original purchase price.

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Hi Jim.

Thanks for pointing out that nuance about cost basis being linked to the original purchase for any CGT down the road. I am ok with later applied CGT being based on the original purchase, since that would have been the case for the original portfolio with the Drivewealth account.

A further complication with liquidating and CGT considerations, specifically for me, is I am in the middle of a move from the Republic of Ireland to the the UK. So the CGT will probably come under the Irish system. But I will have to speak to a tax accountant who knows both systems. From a quick read of the Irish system, Irish CGT is due on disposals for 3 years after leaving the country. Irish CGT is currently 33% and the Irish CGT exemption is 1270 Euros, which is much lower than the UK exemption. I will also have to check if there is a 30 day repurchase type rule in Ireland but since I will be repurchasing while resident in the UK, who knows!

I didn’t mention the Irish move in the original question because it makes it a much more complicated question and my preference was, and still is, an internal Drivewealth transfer from their discontinued account product to a partner account, which unfortunately, is looking less likely. I also contacted Revolut as they are also a DriveWealth front end partner. They confirmed a transfer is not possible with them either.

So, it looks like I will have to go the forced liquidation route and all its attached cross border CGT nuances and caveats :exploding_head: . ’ Life is What Happens To You While You’re Busy Making Other Plans

Any-who, I have some time to figure out which is the best of the worst options :face_with_peeking_eye:. DriveWealth have not put a time line on account closure YET, but they have added a charge of $5 USD a month for keeping the account going.

I have to say I am pretty disappointed, putting it politely, with DriveWealth. I was recently messaging one DriveWealth partner who said they were notified about the discontinued product back in August 2021. The first email I received was in Feb 2022 and that was after they sold a portion of my Apple stock to release $60 USD to cover a years worth of $5 USD monthly fees. No emails or monthly reminders about the product being discontinued, no warning emails about forced sale of stock to have enough cash to cover their new charge and yes I did check spam and email history :grinning:. And no procedure to transfer to one of their partners, which is a lost opportunity for DriveWealth and their partners, since they are closing the DriveWealth individual product for all jurisdictions, not just Ireland.

Again thanks for all the ideas and feedback to you and the other community participants. If I do go with FreeTrade as my new Broker to reboot this portfolio, the excellent input received here is definitely a plus for me.

Thanks

Paul

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