Dealing with Tax

Capital Gains Tax

1

The concept of capital gains tax is pretty simple. When you buy a stock and sell it for a profit, an investor may be liable to pay tax on that profit.

2

For example, if an investor buys a stock for $10 and sell it for $25, $15 would be subject to capital gains tax. You simply subtract the original investment from the price of the investment when you sold it. 

3

In many countries, investors don’t pay any capital gains tax at all until they earn a certain amount in profit. In the UK, investors don’t pay any tax until they earn more than £12,300 in capital gains.

4

When capital gains tax, investors usually need to register with their local tax authority. In the UK, investors should sign up for self-assessment on investment returns – the same applies on dividends.

Test your knowledge...

1. How much can you expect to earn from a cash investment?

Copyright © 2021 Methodology

That's wrong - try again!