Paying Income Tax

slowcoachme

I cashed in an amount from an investment trust. It was a gift to my son for house deposit. It sat in my current account for a couple of weeks. I do self assessment tax return. I will declare it on my tax return, do I pay tax on it? Thankyou

eskbanker

Any gains in the value of your stake since acquisition will be liable to capital gains tax rather than income tax, but there's an annual allowance of £12K so you'll only actually pay CGT if the gain exceeds that.

https://www.gov.uk/capital-gains-tax

slowcoachme

Thankyou for that. I’ll have to do my sums now, I’ve had the investment for years, so I think I’ll have to pay a tidy sum��

Malthusian

Have you considered selling it in stages, over two or more tax years, so you can use two allowances? (No help if all the money is needed right now, but worth asking.)

If you cashed it in less than ~30 days ago, it's not yet spilt milk. You can buy back the shares (or some of them) and the capital gain is effectively cancelled out under the "bed & breakfast" rules. So if this was "a couple of weeks" ago you still have time.

(Specifically, the disposal of the shares will be matched against the repurchase when calculating CGT, instead of the original purchase years ago. Any gain is highly likely to be within your allowance unless we're talking about hundreds of thousands of pounds.)

Any investments showing losses that you could sell and set against the gain?

Keep_pedalling

slowcoachme wrote: »

Thankyou for that. I’ll have to do my sums now, I’ve had the investment for years, so I think I’ll have to pay a tidy sum��

If the gain is above the allowance, and you have any old shares in things like banks and BT that are showing significant losses, now would be a good time to sell as you can offset losses against the gains you have made on your UTs.

jimjames

Based on the title of the thread the answer is that money sitting in your account from an investment sale is not liable to income tax. Any interest you earn from it may be but that's likely to be minimal over a few weeks so income tax is not an issue.

The investment gain may be subject to capital gains tax but that's from the increase in value not from the money sitting in your account.