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Calculating gain on a General Investment Account
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Jubee
Posts: 6 Forumite

I am thinking of opening a General Investment Account and know that I could withdraw £3k annually without paying capital gains tax but I am not clear on how to calculate the gain as I have never bought stocks and shares before.
If I invest it £20k in a lump sum and it grows to £24k, I can see that the gain is £4k, so I withdraw £5k would I pay CGT on £1k?.
But if later in the year or in the following year I invest an additional £5k, but my investment drops to say, £23k and then I add £1k and the market picks up and my investment becomes £25k.
How on earth do I work out what the gain is for each separate investment?
I will only know the total value of the account at that point in time, so how do I calculate the capital gains tax due if I withdrew £5k??
How do I know if one lump sum had a gain but another made a loss?
Advice would be much appreciated please?
Thank you
If I invest it £20k in a lump sum and it grows to £24k, I can see that the gain is £4k, so I withdraw £5k would I pay CGT on £1k?.
But if later in the year or in the following year I invest an additional £5k, but my investment drops to say, £23k and then I add £1k and the market picks up and my investment becomes £25k.
How on earth do I work out what the gain is for each separate investment?
I will only know the total value of the account at that point in time, so how do I calculate the capital gains tax due if I withdrew £5k??
How do I know if one lump sum had a gain but another made a loss?
Advice would be much appreciated please?
Thank you
0
Comments
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You become liable for CGT when you dispose (sell) an asset. It has nothing to do with withdrawing it from your GIAIf you are just doing this as a tax wheeze and know nothing about investing you will quickly come unstuck. People invest because they want to invest, tax is secondary4
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Jubee said:
How on earth do I work out what the gain is for each separate investment?
I will only know the total value of the account at that point in timeWhy will you only know the total value of the account? I think all platforms show you the value of the assets within the platform, not only the total value. If you're not sure, I'd also pick a platform that can generate CGT reports for you (to aid, they can't be used in place of your own diligence). If you make multiple investments into the same fund then the buy price is the weighted average - albeit there may be some additional complications like equalisation.If you've not bought stocks and shares before, then it may be better to start with a stocks and shares ISA, so you don't need to worry about this.2 -
Firstly use an ISA then you can forget all this.But your first example:- If I invest it £20k in a lump sum and it grows to £24k, I can see that the gain is £4k, so I withdraw £5k would I pay CGT on £1k?.
No you only pay CGT on the gain on the value you withdraw so:- taking £5k out of £24k is 21% of the value made up of £4200 original value and £800 gain. If you wanted to use up £3000 of CGT allowance and no more. You would need to withdraw 75% (3/4) so £18k made up of £15k original value and £3k of gain.Your next example gets too complicated without a spreadsheet but if you invest in different stuff (shares or funds etc) it’s the gain on what you actually sell that counts. If you invest in the same stuff each time then you average the buying price and compare that to the selling price.0 -
Thanks both I have used my ISA and am using a SIPP as I earn, so GIA it has to be.
MX5huggy I get the first part of your reply -thanks.
If I always buy the same fund are you saying I multiply each unit purchased x buying price for every transaction, then calculate an average purchase price per unit, which I then compare to the selling price?0 -
Jubee said:If I always buy the same fund are you saying I multiply each unit purchased x buying price for every transaction, then calculate an average purchase price per unit, which I then compare to the selling price?1
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