Taxes in the UK on investing in stocks

Johnnyboy11

A couple of thoughts from me...

In any given tax year, you can also sell investments that have made a loss to reduce your CGT bill.

If you do incur a net Capital Gain above the Annual Exempt Amount (£12,300), then you need to report this to HMRC either using their online tool, or by submitting a Self Assessment tax return, which is a pain. I also recall that if you sell investments more than 4x the Annual Exempt Amount then in some circumstances this also needs to be reported.

TBC15

Johnnyboy11 said:

A couple of thoughts from me...

In any given tax year, you can also sell investments that have made a loss to reduce your CGT bill.

If you do incur a net Capital Gain above the Annual Exempt Amount (£12,300), then you need to report this to HMRC either using their online tool, or by submitting a Self Assessment tax return, which is a pain. I also recall that if you sell investments more than 4x the Annual Exempt Amount then in some circumstances this also needs to be reported.

I think you only need to report disposals more than 4 times your allowance if you are already registered for self assessment. https://www.gov.uk/capital-gains-tax/work-out-need-to-pay

Ted_01

Hi, I'm trying to understand this all myself as I am planning on investing about 150k (cash from sale of property).

One thing that hasnt been mentioned is dividends are subject to income tax, and whether you hold funds that pay income or reinvest you still need to pay income tax.

Quotes:

"The income from unit trusts and OEICs is always taxable regardless of the share class or whether the income is actually taken or reinvested. However, it may be tax free if it falls within one of the allowances (dividend allowance or starting rate for savings/personal savings allowance)."

"The first £2,000 dividend income is tax free as it's covered by the dividend allowance."

Since this hasnt been mentioned in this thread I'm wondering if I've misunderstood it.

I've got a S&S ISA with fidelity. On the fidelity platform there is no reporting of what the dividends amounted to before they were reinvetsed so in the case of investments outside an ISA I dont know how one would go about calculating the income tax?

eskbanker

Ted_01 said:

Hi, I'm trying to understand this all myself as I am planning on investing about 150k (cash from sale of property).

One thing that hasnt been mentioned is dividends are subject to income tax, and whether you hold funds that pay income or reinvest you still need to pay income tax.

Quotes:

"The income from unit trusts and OEICs is always taxable regardless of the share class or whether the income is actually taken or reinvested. However, it may be tax free if it falls within one of the allowances (dividend allowance or starting rate for savings/personal savings allowance)."

"The first £2,000 dividend income is tax free as it's covered by the dividend allowance."

Since this hasnt been mentioned in this thread I'm wondering if I've misunderstood it.

You've understood the taxation of dividends correctly but perhaps missed that the thread was about taxation of profits when selling, which is why the discussion thus far has only been about CGT rather than income tax.  Strictly speaking, the first £2,000 isn't tax-free as such but is taxed at 0%, so it does count as taxable income and can increase your overall income tax liability.

Ted_01 said:

I've got a S&S ISA with fidelity. On the fidelity platform there is no reporting of what the dividends amounted to before they were reinvetsed so in the case of investments outside an ISA I dont know how one would go about calculating the income tax?

I don't know the specifics of Fidelity's data presentation but would expect that dividend income is reported when holding unwrapped investments, as any such investors need to know this for income tax purposes, whereas for ISAs it's irrelevant.