This information is based on current tax regulation, which may be subject to changes in the future.
It depends on which type of account you hold your investments in.
Stocks and Shares ISA or Junior ISA
You will not pay Capital Gains Tax or Income Tax on any funds you hold in a Stocks and Shares ISA or Junior ISA.
Personal Pension
You will not pay tax on investment returns while they're in your pension. When you are eligible to start withdrawing money from your pension, you can usually take up to 25% tax-free. The maximum tax-free cash you can take from all your pensions is £268,275.
The remaining 75% is taxed as income (just like your salary). You'll need to take into account any other income you may receive, such as the State Pension.
How much tax you pay and when will depend on how you choose to take money from your pension.
General Account
If you hold funds in a General Account, you might be liable to pay Income Tax and Capital Gains Tax, subject to your wider financial situation and the thresholds set by the government
As a UK taxpayer you get a tax-free dividend allowance each year and you'll only have to pay income tax on dividends that go over that amount. You can find more information about dividend tax and the current dividend allowance on HMRC's website.
There is also an HMRC personal savings allowance from interest income paid by funds that are invested in bonds. The amount of personal savings allowance you are entitled to depends on your specific personal circumstances. For the latest information, we recommend you check the tax section of the HMRC website.
Capital Gains Tax
Capital Gains Tax may be charged when you sell an asset, such as funds or shares, that has gone up in value since you bought it.
Capital Gains Tax is not charged on the total value of the asset you sold. It is charged only on the gain that you have made above your tax-free allowance (called the Annual Exempt Amount). The current capital gains allowance and capital gains tax bands.
It’s your responsibility to declare your Capital Gains and pay any tax that is owed. This can be done through your yearly Self Assessment tax return, or you can use HMRC’s real time Capital Gains Tax Service.
We cannot give tax advice
If you need more assistance with your tax return, we suggest speaking to an accountant or seeking financial advice.
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