Tax due on index-tracker

**Gonzo** · 30 September 2011, 07:32

Originally posted by richy View Post

Hi there

I've used up my Stocks n' shares ISA allowance.. now thinking about taking out a regular index-tracker that is not within the ISA system.

Could anyone advise on how the tax is calculated on this taxable index-tracker? I would have it re-investing any additional money as units. I presume when I cash the whole lot in, there will be some tax. Is that capital gains?

Cheers, rich

The investment will generate income, which is taxable as income (even though it is reinvested).

The investment company will send you tax vouchers for the income, which you will add to the ones that your own company provides you (assuming you are a ltd company contractor) when working out your annual income for income tax purposes.

When you sell you have to deduct all the income that has previously been received and reinvested (and taxed) from the proceeds to work out what the capital gain was and then, potentially, you will be taxed on the capital gain (the annual exemption will probably mean that it will not result in a taxable charge for you but that depends upon your circumstances).

Disclaimer: I am not a Financial Adviser, it would be illegal for me to charge you for this advice. Past Performance is not necessarily a guide to future performance. The value of your investment and the income from it can go up as well as down.

**richy** · 4 October 2011, 23:13

Ok, sounds right. Thanks for the comments

Tax due on index-tracker