A quick CGT question
Discussion
Haha, there is no such thing, but I need to ask...
If I invested £78,378 in a fund a few years ago, and sold it today for £100,255, what would the CG be?
I'm fairly sure it's not £100,255 - £78,378 = £21,877 because part of the gain taken is return on capital. But I can't remember how much and I don't want to exceed by 21-22 CGT allowance.
Hopefully all answers will be the same...! Thanks in advance.
If I invested £78,378 in a fund a few years ago, and sold it today for £100,255, what would the CG be?
I'm fairly sure it's not £100,255 - £78,378 = £21,877 because part of the gain taken is return on capital. But I can't remember how much and I don't want to exceed by 21-22 CGT allowance.
Hopefully all answers will be the same...! Thanks in advance.
Thanks Eric. The rate is another thing I'd like to clarify.
Google finds https://www.litrg.org.uk/tax-guides/savers-propert... which says:
[i]The rate of CGT you pay depends partly on what type of chargeable asset you have disposed of and partly on the tax band into which the gain falls when it is added to your taxable income.
CGT is charged at the rate of either 10% or 18% for basic rate taxpayers. For higher or additional rate taxpayers, the rate is either 20% or 28%. If you are normally a basic-rate taxpayer but when you add the gain to your taxable income you are pushed into the higher-rate threshold, then you will pay some CGT at both rates.
Gains on most chargeable assets are subject to the 10% or 20% rate, depending on whether the taxpayer is a basic rate or higher/additional rate taxpayer. Chargeable gains on disposals of residential property that do not qualify for, or are not fully covered by, private residence relief are subject to the 18% or 28% rate.[/i]
So as basic rate taxpayer, for gains on investments, am I looking at 10%?
Google finds https://www.litrg.org.uk/tax-guides/savers-propert... which says:
[i]The rate of CGT you pay depends partly on what type of chargeable asset you have disposed of and partly on the tax band into which the gain falls when it is added to your taxable income.
CGT is charged at the rate of either 10% or 18% for basic rate taxpayers. For higher or additional rate taxpayers, the rate is either 20% or 28%. If you are normally a basic-rate taxpayer but when you add the gain to your taxable income you are pushed into the higher-rate threshold, then you will pay some CGT at both rates.
Gains on most chargeable assets are subject to the 10% or 20% rate, depending on whether the taxpayer is a basic rate or higher/additional rate taxpayer. Chargeable gains on disposals of residential property that do not qualify for, or are not fully covered by, private residence relief are subject to the 18% or 28% rate.[/i]
So as basic rate taxpayer, for gains on investments, am I looking at 10%?
Isn’t your tax quantum going to be whatever the tax rate is on the actual gain of £ 9,577 ie the total fund sale less the purchase price once then the allowance of £12,300 is deducted ?
Years ago I recall being allowed to add onto the purchase price of shares a percentage inflation factor factor but that was stopped.
Transferring a portion of the fund to a partner presumably may reduce your tax potentially.
Other investments ( say VCT or EIS etc ) may also allow you to reduce your CGT cost.
Years ago I recall being allowed to add onto the purchase price of shares a percentage inflation factor factor but that was stopped.
Transferring a portion of the fund to a partner presumably may reduce your tax potentially.
Other investments ( say VCT or EIS etc ) may also allow you to reduce your CGT cost.
alscar said:
Isn’t your tax quantum going to be whatever the tax rate is on the actual gain of £ 9,577 ie the total fund sale less the purchase price once then the allowance of £12,300 is deducted ?
It looks like it, if quantum means 'amount' 
alscar said:
Other investments ( say VCT or EIS etc ) may also allow you to reduce your CGT cost.
My understanding is that they are only useful for higher rate taxpayers.The fund is with Fidelity, so I asked them what the CGT rate was on investments. They declined but sent me this link: https://www.gov.uk/capital-gains-tax/rates Can anyone find the CG rate on investments there? I can't!
My decision now, I think, is whether to sell about half to take a small profit and use up the allowance, or sell the lot, pay some CGT at hopefully 10% and wait for the index to fall for reinvestment. I just don't want a nasty surprise when the Tax Cert arrives next year.
Thought - Fidelity must be able to calculate chargeable gain because they put it on their Tax Certs!
I suppose the other option is to do nothing and see if the current fund increases but depends on what else you may have to realise gains - or not.
Don’t know how easily Fidelity make it to “ bed and breakfast “ your fund if you sell and then buyback although the slight risk then is market gain in the meantime.
From that link you attached I would agree 10% looks to be the tax percentage payable on your gain.
Don’t know how easily Fidelity make it to “ bed and breakfast “ your fund if you sell and then buyback although the slight risk then is market gain in the meantime.
From that link you attached I would agree 10% looks to be the tax percentage payable on your gain.
alscar said:
I suppose the other option is to do nothing and see if the current fund increases but depends on what else you may have to realise gains - or not.
Don’t know how easily Fidelity make it to “ bed and breakfast “ your fund if you sell and then buyback although the slight risk then is market gain in the meantime.
As it's essentially the FTSE 100, which seems to oscillate between 6800 and 7700, now seems like a good time to take some (or all) profit. The fact there's a CGT allowance to use up is another factor - the two windows line up, as it were.Don’t know how easily Fidelity make it to “ bed and breakfast “ your fund if you sell and then buyback although the slight risk then is market gain in the meantime.
Of course knowing my luck it will go up to 8000 next week and never fall!
Fidelity (nor any provider) can tell you what *your* tax rate is - they should however be able to tell you what your capital gain is (once you have completed a sale assuming they have accurate records of the cost of whatever it is that you have sold) and then it is only by adding this gain to your taxable income will it become clear whether any portion of your taxable gain can be taxed at 10% or if some (or all) of it should be taxed at 20%.
E.g. your income from employment is £49,270. You record a capital gain of £14,300. The first £12,300 of that falls within your CGT allowance leaving £2k to be taxed and you can squeeze the first £1k into the basic rate band (with 10% tax due) but the last £1k has popped over into the higher rate band (with 20% tax due). Ie. £300 of CGT payable (equiv. to a blended rate of 15% on the £2k ‘taxable’ part of your gain).
Simples!
E.g. your income from employment is £49,270. You record a capital gain of £14,300. The first £12,300 of that falls within your CGT allowance leaving £2k to be taxed and you can squeeze the first £1k into the basic rate band (with 10% tax due) but the last £1k has popped over into the higher rate band (with 20% tax due). Ie. £300 of CGT payable (equiv. to a blended rate of 15% on the £2k ‘taxable’ part of your gain).
Simples!
Edited by Mogul on Wednesday 18th January 11:24
Simpo Two said:
My decision now, I think, is whether to sell about half to take a small profit and use up the allowance, or sell the lot, pay some CGT at hopefully 10% and wait for the index to fall for reinvestment. I just don't want a nasty surprise when the Tax Cert arrives next year.
!
That’s simple - realise all the gain now and reinvest the funds in …….!
. ……. a secondhand Aston Martin 😜
Simpo Two said:
As it's essentially the FTSE 100, which seems to oscillate between 6800 and 7700, now seems like a good time to take some (or all) profit. The fact there's a CGT allowance to use up is another factor - the two windows line up, as it were.
Of course knowing my luck it will go up to 8000 next week and never fall!
If it is something as vanilla as a FTSE100 tracker and you don't want to be out of the market, you could always just switch into a comparable fundOf course knowing my luck it will go up to 8000 next week and never fall!
Thanks Mogul and Eric. There's no danger of getting anywhere near the higher rate band, so it looks like 10% on any CG over £12,300.
So if I sell the lot I'll be in for about £957 CGT. The catch is that you want to sell more to take more profit, but if that gain is about 10% you're standing still. I call it 'running up a down escalator'.
So if I sell the lot I'll be in for about £957 CGT. The catch is that you want to sell more to take more profit, but if that gain is about 10% you're standing still. I call it 'running up a down escalator'.
NowWatchThisDrive said:
If it is something as vanilla as a FTSE100 tracker and you don't want to be out of the market, you could always just switch into a comparable fund
No, I think 7900 is high. Happy to sell and buy back at a lower rate. My instinct is to hedge my bets and sell about half, as per Mr Pointy above.Elderly said:
. ……. a secondhand Aston Martin ??
i already have one!Edited by Simpo Two on Wednesday 18th January 11:27
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