How does CGT work?

[Deleted User]

Londonlisa12 wrote: »

So average selling price per unit minus average buying price per unit gives me the average profit.

If my understanding is correct, there is no average selling price. The selling price is an actual price on the day of sale. Unlike the average buying price which changes every time you buy/add new units.

Londonlisa12

lindabea,when i say its my only sell of the year i mean fund product but maybe done on separate days at different prices.

eskbanker, yes i was thinking of the personal allowance,thank you for correcting me and i will keep in mind i can deduct buying and selling costs.

Thank you both.

so on a quick calculation a £20,000 investment could appreciate 60%{ £12,000} and be cashed in before CGT was payable?

bowlhead99

Londonlisa12 wrote: »

so on a quick calculation a £20,000 investment could appreciate 60%{ £12,000} and be cashed in before CGT was payable?

Yes, if you sold those shares for £32,000 you would deduct the purchase cost of the shares (£20,000) leaving a profit (capital gain) of £12,000 which would be entirely covered by your £12,000 annual exemption.

In fact even if the £20,000 had appreciated 120% to £44,000, you could sell half of them on Friday 3 April 2020 for £22,000 (£22,000 proceeds less £10,000 cost is £12,000 gain, covered by your 2019/20 annual exemption) and then the other half on Monday 6 April 2020 for another £22,000 (£22,000 proceeds less £10,000 cost is £12,000 gain, covered by your 2020/21 annual exemption); no tax to pay in either tax year, assuming you didn't do any more disposals.

TBC15

It may be worth mentioning, I was chopping in some of the wifes investments with II tonight to use up the CGT allowance for 19/20.

As the amount involved was over £100,000 my intention was to do it in 2 batches to avoid the £40 transaction fee for sales over £100000.

Once the initial sell instruction was made II prevented me from making a second sale.

This will probably be resolved once the initial sell is priced, but worth bearing in mind if you leave things until the last minute.