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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have been out of work since 28 Feb 2015. I have investments

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Hi, I have been out of work since 28 Feb 2015. I have investments that are performing very well and considering cashing in my shares or at least some. I am 56 years old. What would be the tax implication if cashing in approx £200,000 worth of shares? Previous to my redundancy I was in the 40% tax bracket.
Hi. There are two rates of Capital Gains Tax, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in the tax year you make the gains. If you make gains in excess of £11,100 in 2015/16 (the annual exemption), one of the following scenarios will apply: 1 If the sum of your income and the net taxable gains in 2015/16 is £42,385 or less, then you will pay CGT at 18% on all the net taxable gains. 2 If your income alone is £42,385 or more in 2015/16, then you will pay CGT at 28% on all the net taxable gains. 3 If your income alone is less than £42,385 in 2015/16 but the addition of the net taxable gain take you over £42,385 then you will pay some CGT at 18% and some at 28%. 4 If you have no income in 2015/16, then the first £11,100 of the gains will be tax free, the next £31,785 will be taxed at 18% and the balance will be taxed at 28%. I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.
So if I understand correctly, the tax on £31,785 = £5,721 at 18% and £189,000 which is less the £11,000 difference between that and £31,785 is £157,215 = £44,020 in tax? The total tax implication on £200,000 with no income in 2015-2106 will be approx £49,741. Did I understand your answer correctly?
You said in your question that you were thinking of "cashing in approx £200,000 worth of shares", not £200,000 worth of gains. You only pay CGT on the gains, not that part of the total cash realised that is the cost of the shares. If you make £200,000 in gains then the CGT will be £49,713.50 (£11,100 a 0% + £31,785 @ 18% + £157,115 @ 28%).
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