CGT Query on investment sale

[Heylittlesongbird]

Hi, I wondered if anyone could confirm my understanding of potential CGT I will pay if I were to sell an investment.

(Numbers are rounded for simplicity)

I am a basic rate tax payer and after taking into account my job I am left with £11,000 remaining at the basic rate tax band.

In 2001 I put £4000 in Axa Framlington Health fund. I was obviously a lot younger and didn't understand much about investments, so it didn't go into an ISA.

It is now worth £16,000.

If I were to sell it in full then I think that the calculation is £16,000 less purchase price off £4,000 less annual CGT allowance of £3,000 which would mean that I pay CGT at 10% on £9,000, so £900 tax?

But if I were to sell a quarter of it, is the calculation £4,000 less purchase price of that element of £1,000 less CGT allowance of £3,000 which would mean that there is no CGT to pay?

So (as long as the CGT allowances don't change) I could sell the investment over 4 years and not have to pay CGT as there would be another £3,000 CGT allowance each year?

Is that correct or have I missed something? Thanks a lot

Also, if I were transfer £4,000 of the investment to my spouse would they be able to sell it and not pay CGT on it - as in £4,000 value less original £1,000 purchase, less their CGT allowance of £3,000?

www.gov.uk/capital-gains-tax/gifts www.gov.uk/capital-gains-tax/gifts]]]]

Yes, you can gift to your spouse; they would get their own CGT allowance, calculated on the amount you paid for the original investment.

Yes, if you sell £4000 this year, original value £1000, then the £3000 is your CGT allowance - no more tax to pay.

In theory you can do this this tax year and in the next 3 tax years; IF (and it's a big if!) the CGT allowance remains the same in those years, it may well change.

Just one clarification, if you sell the whole lot, your gain is £12k, if you only have £11k left within your basic rate band, £1,000 will go into the higher rate band.

Although you don’t pay tax on your £3,000 allowance, it uses up your tax band.

No it doesn't