Capital Gains Tax on Shares

invuk

Hi All,

I earn approximately 25k Gross per year in my day job.

I have sold shares in this tax year making a profit of approximately £50k.

I know I have the 3k allowance.

My question is would the profit on the 47k be taxed at 18% (basic rate income tax) or would it be added to my salary of £25k and mean it would be taxed at 24% (higher rate income tax).

Also as my combined earnings would be over £50,271 (higher rate income tax band) would any of it be taxed at 40%?

Never been in this situation before so this is all new to me!

Thanks.

masonic

The part that exceeds the basic rate band will be taxed at the higher rate for capital gains tax.

invuk

So am I right in saying that approximately £22k of the profit on shares will be taxed at 24%. And nothing will be taxed at 40%. 

masonic

Nothing will be taxed at 40%. Income should be arranged below capital gains so you get the more favourable tax treatment.

Beddie

Handy calculator, to give you an idea of the tax you'll have to pay:

https://www.aviva.co.uk/investments/investment-account/capital-gains-tax-calculator/

invuk

Thanks for all for help. I need to save to pay the tax bill now! 

TBC15

invuk said:

Thanks for all for help. I need to save to pay the tax bill now! 

Well at least you have a year to get the money together.

I’d recommend the online disclosure and payment method if you don’t do self-assessment.

Heedtheadvice

and do not forget to factor in your calculations any costs that have been required to make this capital gains both ( buying, selling, keeping, stamp duty etc. ), and any previous years losses that you can carry forward. 

Do you not hold the assets in an ISA?

[ although this seems not to apply to you at the moment] if they are not stock and shares ( and similar assets that can be held in an ISA wrapper ) then are any of them except from CGT such as some specific types of personal assets and your main home.

If you do not know could be very worthwhile checking (or if non exempt pointless) for future financial management.

wmb194

Heedtheadvice said:

and do not forget to factor in your calculations any costs that have been required to make this capital gains both ( buying, selling, keeping, stamp duty etc. ), and any previous years losses that you can carry forward. 

Do you not hold the assets in an ISA?

[ although this seems not to apply to you at the moment] if they are not stock and shares ( and similar assets that can be held in an ISA wrapper ) then are any of them except from CGT such as some specific types of personal assets and your main home.

If you do not know could be very worthwhile checking (or if non exempt pointless) for future financial management.

What do you mean by, "keeping"? The only allowable deductions need to directly relate to the purchase and sale so, for instance, ongoing stockbroker account fees are not allowable. Usually for financial securities this leaves dealing commission and stamp duty/FTT.

invuk

Thanks for all the help. A lot of the profit/sales were completed in the last 30 days in one company (I know you should spread the risk). Since selling it has gone up another 10-15% percent. Is it worth buying some back to avoid paying the 24% tax on profits and reduce most, if not all, to 18%? Kind of made I mess of things in recent years too as sold all my ISA investments and then a few weeks later put it all back into an investment account! This was due to getting fed up of losing! I am also self-employed (not for much longer) so my accountant handles the self-assessment. Also, working it out for myself is near on impossible when you have approximately 100 buys and sells mostly in one company but others too!

masonic

For the sake of an extra 6% tax, it is probably not worth taking the risk of reinvesting over the short term, which could see you face losses much greater than this.