Taxation can be confusing for the best of us. Let’s try and break down in simple terms how investing will affect your taxes.
For ISAs: if you have an ISA, you can invest up to £20,000 per year completely tax free. There are many types of ISAs, such as cash ISAs, stocks and shares ISAs and innovative finance ISAs. You can have multiple accounts in each type, but you can only open and fund one account per ISA Type each year.
For General Investment Accounts: If the profit you make when you sell your shares or investments exceed £12,300, you will pay Capital Gains Tax (CGT) on the additional profits.
If you are a higher or additional rate taxpayer you will pay 28% CGT on your gains from residential property and 20% on your gains from other chargeable assets.
If you are a basic rate taxpayer you will pay 10% CGT on your profits over £12,300. If your profits take your total earnings into the next tax rate, your CGT will be that of a higher rate taxpayer