Tax outside of ISA

Jimjiminy100

Good Morning

I have utilised my full 16/17 ISA allowance in S&S and I have continued to invest when I can in my dealing account as I didn't want to have to sit on the cash until Apr 17.

I am a basic rate tax payer and I already contribute a fair wack into my pension each month.

I hold a selection of funds, individual shares and IT's in my dealing account.

I just want to know what if any my tax liability will be on any gains in my dealing account? I have a mixture of INC and ACC units.

Many Thanks

talexuser

Dealing account outside an ISA has the £5,000 dividend allowance (you must include the notional amounts from the ACC funds), as long as you stay within basic rate any dividends over 5k are subject to 7.5% tax.
If you want to cash in the capital gains allowance is £11,100, again if you stay in basic rate, above this you pay 10% tax.

I assume you mean 16/17 ISA allowance is full? otherwise you can still invest this year, and you can invest on April 6th for the new ISA year if you want to.

Jimjiminy100

Many Thanks

I have amended my incorrect ISA years!

So essentially as long as I am not making more than £5k per year in gains I will pay no tax.

The capital gains hopefully wont be an issue as I wont be using the dealing account after Apr 17 when I get my new allowance and if by chance I am lucky enough to exceed the CGT allowance in years to come I will just withdraw over 2 separate financial years to avoid it.

I was getting confused thinking I was going to get hit with lots of charges in Apr to use the "bed & ISA" facility to move everything to my new ISA allowance!

talexuser

essentially yes, the 5k is for dividends, so keep a record of all dividends and the yearly results for the ACC funds (where they are automatically reinvested). Gains is usually used to describe the increase in capital values, i.e. share price etc rather than dividends, just for the purposes of the different tax arrangements between dividends and capital gains.

Yep, just withdraw the capital gains allowance each year.

Good plan, put the max within an ISA wrapper when you can because you avoid the capital gains limit, and don't have to bother about recording dividends, and can cash in or take income whenever you like, as much as you like.

gadgetmind

Note that capital gains only arise when you make a sale. Calculating dividends versus gains for ACC funds is a real PITA so it's maybe best to avoid these. Basically, whenever a dividend is paid, it's used to buy more of the fund, which means you've made loads of separate purchases.

talexuser

gadgetmind wrote: »

Calculating dividends versus gains for ACC funds is a real PITA.

Yes, my unwrapped ITs are all income for this valid reason, but I understand that the yearly statement for ACC funds should show the dividend amount for tax returns, just more complicated if arrives later than the relevant tax year etc?