How investors are protecting themselves from increased capital gains tax - GrowthInvest

How investors are protecting themselves from increased capital gains tax

Capital gains tax surged this autumn, prompting investors to adjust their strategies in response.

Capital gains tax (CGT) is applied to the profit made when assets or investments are sold at a gain. It is calculated on the difference between the purchase price and the sale price of the asset.

A broad range of assets are subject to CGT, including second properties, most personal items worth more than £6,000 (excluding cars), business assets, and any shares not held within tax-efficient vehicles like Individual Savings Accounts (ISAs) or Self-Invested Personal Pensions (SIPPs).

Given the substantial value of some of these assets, CGT can significantly impact investors’ overall returns, making it a crucial factor to consider in investment planning.

Laith Khalaf, head of investment analysis at AJ Bell, explains it this way: “For most people, capital gains accumulate on assets bought with money that has already been taxed as income, making capital gains tax a second wave of taxation.”

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