Help ! Money has more than doubled !

nellykim

Hallo everyone, its my first post.. just a question...

two and a half years ago I invested ten thousand into abbey multi manager equity accumulation shares, and totally, their valuation today is around twenty one thousand pounds.

It seems too good to be true, and I wondered what the taxman would take from it, if I were to just draw some out and enjoy it - you can see I dont know much about this. I dont have any financial adviser, I just said, ok I will risk it, apparently its a high risk investment.

I am retired, not yet 60, and I just wondered, simplistically if it would be a good thing to draw some out now and then, and spend it for gods sake, but would HE ( taxman) come along and tap me on the shoulder for a share. How would it work ?

Would appreciate comments

thanks alot

baby_boomer

Congratulations, nelly .

You've got at least £8,800 free capital gains each year. It may be higher now but that's the last figure I remember.

So you could sell up to 3/4 of your investment tax free now as long as you didn't have other capital gains in 2007/8.

Then, if you wanted, you could sell the rest 2008/9 tax free as well.

Alternatively could sell half and let the rest run as a "free" investment which would make you feel very good if it doubled again in the next five years or so .

BTW, what a great thread title! I bet a few people here wish they had your dilemna !

nellykim

thanks, babyboomer for your reply, and you have set me thinking along lines of perhaps I will take some out, and enjoy it now- after all, Id hate it if there were a "crash" for any reason and I lost it.

By the way, its an ISA, so I suppose I still DO have to pay Capital Gains ? I thought an ISA meant it was tax free ? or is that income tax I am thinking of ?- dont know.

And does anybody know why, when I invested the money, I was told it would be better as a " long-term " investment, say, 5 to 10 years. Surely there would be more of a risk , ( ie. in LOSING more, if it MADE more, andTHEN crashed ? ) does that make sense ?

I know its a small amount next to some others on the forum, but its a hell of alot to me, and, yes, think I'll enjoy some now, instead of watching it grow.

Cant be too greedy.

Biggles

nellykim wrote: »

By the way, its an ISA, so I suppose I still DO have to pay Capital Gains ? I thought an ISA meant it was tax free ? or is that income tax I am thinking of ?- dont know.

No, you don't pay tax on any capital gains in an ISA.

But you said you'd 'invested 10k 2½ years ago' - you're only able to invest £7k in any one tax year, did you perhaps spread this investment over two years, or might you be wrong about it being an ISA?

brasso

The maximum you can invest in an equities ISA in any one tax year is £7,000, so I don't think your original £10K investment could have been in an ISA. Unless there's something clever that the Abbey do that spreads it across an ISA and normal investment.

ISA gains are tax-free up to the capital gains limit mentioned, and taxable after that. I believe that's how it works, but I'm no expert.

brasso

Ooops, cross post.

nellykim

thanks, biggles and brasso. I just checked the paperwork, and I put £7000 into Investments ISA Multi Manager Equity Accumulation, and then the £3000 into the same, but THAT says, OEIC. They were deposited together at the end of 2004.

To tell the truth, I got in touch with them other day, to ask for valuation, and when I noticed that the larger amount was doing better, I said could I transfer the smaller amount into THAT ? They said, ok, yes, but they did it by sending me a cheque, and I was advised to wait till it cleared, and make another cheque out and sent that in, to add to the other.

Cheque came, etc, did what they said..they returned cheque, saying I needed to sign a declaration, so I am at the stage now, where I think I will tear up the cheque, keep the money - near enough £4500 -and leave the other to run, near enough £17,500. Its still more than I had, so.. think I'm happy !

ps.. how on earth does a person keep track of their taxes, etc. which may or may not be due, if they make money regularly over time ? I mean, how would the taxman know ?

thanks to you all

Ian_W

brasso wrote: »

ISA gains are tax-free up to the capital gains limit mentioned, and taxable after that. I believe that's how it works, but I'm no expert.

No, the £9200 capital gains allowance is for gains OUTSIDE an ISA, gains in an ISA are free of CGT.

nellykim your investment did very well indeed but to answer this:

And does anybody know why, when I invested the money, I was told it would be better as a " long-term " investment, say, 5 to 10 years. Surely there would be more of a risk , ( ie. in LOSING more, if it MADE more, andTHEN crashed ? ) does that make sense ?

It does but on the basis of what you've said you'd need a market drop of 50% to actually lose money now and get back less than you invested. That could happen but it's a very serious market crash by any standards.
If that had happened just after you'd invested you'd have lost half your original investment and that is why 5+yrs is suggested for shares to give the market time to recover if a crash happens.

brasso

Ian_W wrote: »

No, the £9200 capital gains allowance is for gains OUTSIDE an ISA, gains in an ISA are free of CGT.

Oh, that's a surprise to me. So if my £7K went into a lucky stock selection, and it made (say) £20K the same year, I could withdraw the whole £27K without paying any tax?

Ian_W

brasso wrote: »

Oh, that's a surprise to me. So if my £7K went into a lucky stock selection, and it made (say) £20K the same year, I could withdraw the whole £27K without paying any tax?

Yep - but if you do find such a selection be sure to PM me!

EdInvestor

brasso wrote: »

Oh, that's a surprise to me. So if my £7K went into a lucky stock selection, and it made (say) £20K the same year, I could withdraw the whole £27K without paying any tax?

Sure but you would be mad to do so. You should add to the ISA every year so that when you retire you have a great big pot of capital generating an income and not only is it all tax free, you don't even have to tell the taxman it exists.

Whereas with pensions.....:rolleyes: ....don't ask.

I put £7000 into Investments ISA Multi Manager Equity Accumulation

OK that's all tax free.

...and then the £3000 into the same, but THAT says, OEIC.

The tax on this works like this: for capital gains, anything up to the annual allowance of just over 9k is tax free. For dividends, assuming you are a basic ratre taxpayer, no tax to pay as it's covered by a tax credit which comes with the dividend.

To tell the truth, I got in touch with them other day, to ask for valuation, and when I noticed that the larger amount was doing better, I said could I transfer the smaller amount into THAT ?

Certainly you should put another 7k into the tax free ISA this year if you can manage it. Can;t imagine why the rigmarole about the cheques

ps.. how on earth does a person keep track of their taxes, etc. which may or may not be due, if they make money regularly over time ? I mean, how would the taxman know ?

The broker/IFA sends you a statement of all non-ISA investments, which you just attach to your tax return.