CAPITAL GAINS TAX IN PRACTICE
CGT applies to nearly all forms of investment, the notable exceptions being ISAs, Pensions and Investment Bonds. In simple terms, you want to trigger gains by selling an asset that has increased in value. Ideally you want to trigger as close to the allowance (£12,000) as possible. Thats a gain. So by way of example, if you invested £10,000 in 2010 and the investment is now worth £22,000 you would need to sell the entire investment to trigger a gain of £12,000.
The important issue is to know when you invested and how much. This is often more complicated than it appears because funds or holdings may well generate income which might have been paid to you, but may well have been re-invested. Over time the sums get very complicated.
We do a lot of work for clients that have a portfolio that we gradually convert into ISAs. Each year we trigger gains to move over into your ISA, ideally until the taxable investment has nothing left as it has all been moved into a tax-free ISA pot. This is a good way to gradually convert a portfolio into a tax-free portfolio.
A married couple have their own allowance each, but this is only relevant if the investment is jointly owned. Trusts also have a CGT allowance, but only at half the rate of the personal allowance (£6,000 in 2019/20).
You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email firstname.lastname@example.org