Capital Gains Tax

Important information - please keep in mind that the value of investments can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a Junior ISA will not be possible until the child reaches age 18. You can't normally access money in a pension until age 55 (57 from 2028). 

If you own shares, funds or investment trusts outside of an ISA or pension and you sell those assets for a profit, you may need to pay Capital Gains Tax (CGT). 

You're only taxed on the gains you make, not the amount of money you receive from the sale.

And you'll only need to pay tax if your gains for the tax year (6 April to 5 April the following year) - including those made from selling other 'assets' - are more than the annual CGT allowance.

As an example of how CGT works:

You buy shares for £5,000 and hold them in an account other than an ISA or SIPP. You then sell the shares for £20,000, making a gain of £15,000. If this is the only gain you make in the tax year, your taxable amount is £12,000 (your gain minus your tax-free allowance of £3,000). You can also deduct certain costs, such as fees associated with buying and selling shares. Please note, there are different rules for working out the purchase price of some investments when calculating your gain. You can find out more on our Capital Gains Tax reporting tool when you log in to your account.

If you're a basic rate tax payer, the gain you make over the allowance threshold on shares, funds and investment trusts is taxed at 10%. For higher and additional tax bands this rate increases to 20%.

So going back to our example, where the taxable gain is £12,000, as a basic rate tax payer you would pay £1,200. As a higher rate tax payer you'd pay £2,400.

But remember, if you're a basic rate taxpayer the gain you make, when added to your income, could push you into the higher rate bracket. In this case, you'd pay 20%  on however much of the gain falls into the higher income tax band.

*Different CGT rates apply if you're selling a property other than your main home. 

You only pay CGT on the gains you make from 'disposing' of shares, funds or investment trusts that are not in an ISA or pension.

'Disposing' of an item includes:

• Selling it
• Giving it away as a gift or transferring it to someone else
• Swapping it for something else

You can also pay CGT on other assets you 'dispose of', including properties that are not your main home and personal possessions worth £3,000 or more (apart from your personal car).

Depending on the asset, you may be able to reduce any tax you pay by claiming a relief. 

If you dispose of an asset you jointly own with someone else, you have to pay CGT on your share of the gain. If you're married it's possible to hold assets in joint names and transfer those assets to your spouse or civil partner so that they can use their CGT allowance when you dispose of the asset.

You don't usually pay CGT on gifts to your spouse or qualifying charities.

If you leave something to someone in your will, you will not be liable for CGT on those assets.

If you inherit an asset and later decide to 'dispose' of it, you could be liable for CGT.

In this instance for calculating CGT the purchase price of the asset depends on its worth when the person who left it died. For more information, you should speak to a tax adviser or HM Revenue & Customs. 

For more on receiving an inheritance visit our inheritance section.

Important information - this information is not a personal recommendation in respect of a particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity's advisers or an authorised financial adviser of your choice. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.