Low risk investments that attract CGT?

suchong

I’m a higher rate tax-payer and just put a significant sum of money into a one year guaranteed growth bond.

But now that capital gains tax has been reduced, perhaps I should cancel the bond and look for investments that attract CGT instead.

I don’t want to invest in property, or put it all in the stockmarket (not sure how well I’d sleep). Nor do I want to want to hand over a lot of commission to a fund manager.

Are there any low risk, low charge invesments I should consider that attract CGT?

thanks

debbie42

suchong wrote: »

Are there any low risk, low charge invesments I should consider that attract CGT?

I can't understand the question. You are looking for an investment specifically so you'd pay tax on it?

Wouldn't it be better to consider the total potential returns of an investment, after tax (together with risk assessment, of course) rather than worry about the specific tax you're paying.

suchong

Indeed, the potential returns are what matters. But since I'd have to pay 40% tax on the guaranteed income bond, and only 18% tax on an investment that attracts capital gains tax, the CGT investment is very likely to provide the higher return.

I could perhaps get top slicing relief, thereby paying tax at 20%, on the guaranteed bond, if I cashed in in a year of no other income, but it's not certain that I'd be able to do that.

So I'm looking for a CG Taxable investment, but would rather find something less risky than shares for at least part of the money.

dunstonh

I don’t want to invest in property, or put it all in the stockmarket (not sure how well I’d sleep). Nor do I want to want to hand over a lot of commission to a fund manager.

You are aware that any product you buy pays an income to someone?

I could perhaps get top slicing relief, thereby paying tax at 20%, on the guaranteed bond, if I cashed in in a year of no other income, but it's not certain that I'd be able to do that.

Top slicing relief would apply to investment bonds. Not fixed term deposits.

So I'm looking for a CG Taxable investment, but would rather find something less risky than shares for at least part of the money.

Low yield unit trusts, ZDPs and investment bonds (depending on amount involved and timescale).

suchong

dunstonh wrote: »

You are aware that any product you buy pays an income to someone?

What I mean is that I don’t want to hand over a huge chunk of my money to a fund manager, unless he is likely to outperform the market after deduction of charges. A minority of fund managers do so and it’s almost impossible to pick them out for certain since past performance does not guarantee future performance.

dunstonh wrote: »

Top slicing relief would apply to investment bonds. Not fixed term deposits.

Actually the fixed term I invested in is an investment bond, as guaranteed income bonds qualify as such, but I think investment bonds are no use to me as they attract almost 40% income tax, whereas I want to pay 18% CGT.

dunstonh wrote: »

Low yield unit trusts, ZDPs

I'm not sure what you mean by a low yield unit trust - "Your search - "low yield unit trust - did not match any documents. "
Sounds like an investment where the fund manager takes his bite even though his fund will provide only modest returns.

ZDP's sound interesting. I looked them up and appears they do still carry stock market risk, though it's reduced, and they'd attract CGT as I'm looking for. Drawback is, their appear to be few investment opportunities at the moment. From today's telegraph:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/23/cmpibs123.xml

If there were a way to invest in ZDP's directly without going through a fund, that may well be of interest.

What I'm really after is an investment that could give me the guaranteed 6.7% I can get from my guaranteed income bond, but attract capital gains tax. Must be possible in theory for someone to set up such a fund, but perhaps as yet no such investment exists.

cheerfulcat

If there were a way to invest in ZDP's directly without going through a fund, that may well be of interest.

Look here.