Ndubuski 'Andy' Egwim shows how Capital Gains Tax eats into investment returns. Invest £20,000 that grows to £50,000, and you owe £6,480 in tax as a higher-rate taxpayer. The new rates hit in October 2024.
If you don't think this is important, you probably don't know about capital gains tax. If it's outside an ISA, you invest £20K and let's say you make gains of up to £30K, so you end up with £50K. After you remove the £3,000 CGT allowance, you end up with taxable gain of £27,000. Now, as a higher rate taxpayer, CGT gain, the tax on that will be £6,480. As a basic rate taxpayer, it will be £4,860. That's quite significant. So both figures reflect the rates introduced in October 2024.
