Discussion
So if I had a general account in Vanguard with say £100,000 in. That then made 12.6% each year and I sold the profit each year, would that be tax free under the CGT allowance?
Or if it made 15% and I only took £12,600 out each year would that also be tax free and NO CGT to pay?
Obviously I would only be doing this is if I’ve exhausted my ISA and SIPP allowance
Or if it made 15% and I only took £12,600 out each year would that also be tax free and NO CGT to pay?
Obviously I would only be doing this is if I’ve exhausted my ISA and SIPP allowance
Making use of allowances is nearly always sensible. However, there are lots of “it depends” scenarios in the examples above...
In the OP’s case for example, we don’t know if the theoretical 15k sell down is on a single fund/equity or across multiple funds which may yield gains and losses in varying proportions (offsetting).
This is why financial advisers and accountants exist and why forums are better for talking about cars generally. You can pick up some broad knowledge here but your tax position is specific to you.
In the OP’s case for example, we don’t know if the theoretical 15k sell down is on a single fund/equity or across multiple funds which may yield gains and losses in varying proportions (offsetting).
This is why financial advisers and accountants exist and why forums are better for talking about cars generally. You can pick up some broad knowledge here but your tax position is specific to you.
Ok, it would be in a fund LS100 for example. So an initial investment of £100,000, if it went to £115,000 in a tax year. I’d move £12,600 to cash and put it in my bank.
So I’m thinking I’d have no tax to pay because I’ve only cashed the allowance per year in CG
The further gain of £2400 would stay in the fund
So I’m thinking I’d have no tax to pay because I’ve only cashed the allowance per year in CG
The further gain of £2400 would stay in the fund
forest172 said:
Ok, it would be in a fund LS100 for example. So an initial investment of £100,000, if it went to £115,000 in a tax year. I’d move £12,600 to cash and put it in my bank.
So I’m thinking I’d have no tax to pay because I’ve only cashed the allowance per year in CG
The further gain of £2400 would stay in the fund
You don't have to cash it in; you can transfer it to LS80 for instance. After 30 days you can transfer it back.So I’m thinking I’d have no tax to pay because I’ve only cashed the allowance per year in CG
The further gain of £2400 would stay in the fund
I'm not sure if you can just move the gain though: you may have to move the capital that created that gain as well (82% of the original £100k).
Mr Pointy said:
DoubleSix said:
That’s not how CGT works.
Care to explain a bit further rather than just posting five words? Or do you need paying to elucidate?He appears to believe selling £15,000 crystallises a gain of £15,000 - which it does not.
In the example given; to crystallise a gain of £15,000 one would need to sell the entire holding of £115,000.
Taita said:
If I have made £10k this year (so below threshold), it is worth selling down etc this side of April, then reinvesting?
Yes, prudent people make sure they use the annual allowance each and every year.Just have to remember that if you intend to buy the same investment back again then you must wait 30 days - otherwise you will not have made a "disposal" for CGT purposes. So there's some market risk if the price moves in between.
Note 1: Husband/wife can sidestep the 30 days by one selling A and buying B while the other sells B and buys A.
Note 2: An individual can sidestep the 30 days by selling A for CGT and simultaneously buying A in their tax free ISA or SIPP.
Note 3: Even if your gains are less than £12,300 you are still obliged to report transactions to HMRC under self-assessment if your total proceeds of sale exceed 4 x the allowance. i.e. if proceeds of sale exceed £49,200
Note 4: Some people will choose to crystallise both gains and losses because they can be netted off and so long as net gains don't exceed £12,300 there's no tax to pay.
Note 5: Essentially your objective is to manage uncrystallised gains to as low a figure as possible without paying any (or perhaps paying very little) tax. That's because a future government can very easily increase CGT going forward and the increased rate of tax would apply retrospectively to gains you're already sitting on.
forest172 said:
Ok understood
So if I just took out the gain element and left the capital in also, no tax to pay?
No tax to pay this year, but lots of undefused capital gain liability remaining.So if I just took out the gain element and left the capital in also, no tax to pay?
If you've made £15,000 of gains on £100,000 of capital and sell 15,000, there's still (100/115) x £15,0000 worth of capital gains tax liability remaining.
If you want £15,000 out, and haven't used your ISA allowance, consider moving another £20,000 into your ISA before the end of the tax year to deal with a bit more of the CGT liability from this year's CGT allowance.
rockin said:
Taita said:
If I have made £10k this year (so below threshold), it is worth selling down etc this side of April, then reinvesting?
Yes, prudent people make sure they use the annual allowance each and every year.Just have to remember that if you intend to buy the same investment back again then you must wait 30 days - otherwise you will not have made a "disposal" for CGT purposes. So there's some market risk if the price moves in between.
Note 1: Husband/wife can sidestep the 30 days by one selling A and buying B while the other sells B and buys A.
Note 2: An individual can sidestep the 30 days by selling A for CGT and simultaneously buying A in their tax free ISA or SIPP.
Note 3: Even if your gains are less than £12,300 you are still obliged to report transactions to HMRC under self-assessment if your total proceeds of sale exceed 4 x the allowance. i.e. if proceeds of sale exceed £49,200
Note 4: Some people will choose to crystallise both gains and losses because they can be netted off and so long as net gains don't exceed £12,300 there's no tax to pay.
Note 5: Essentially your objective is to manage uncrystallised gains to as low a figure as possible without paying any (or perhaps paying very little) tax. That's because a future government can very easily increase CGT going forward and the increased rate of tax would apply retrospectively to gains you're already sitting on.
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