You’ll be relieved to know you don’t pay income tax on gains.

You pay CGT on gains, and income tax on dividend income (which is subject to its own thresholds).

However, do note that the rate of CGT that you pay is dependent on your income tax bracket in the tax year in question (the relevant date being the date you crystallised the gain, in this case the date on the deal note).

Two other notes in case helpful…

First, if you hold these shares in an ISA, or in a SIPP, both these wrappers give you shelter from both these taxes. Within an ISA or SIPP you can bank as large or small a capital gain as you like, and you won’t be liable for Capital Gains Tax. With a SIPP, of course, once you’re old enough to take the benefits, you can take up to 25% tax free, and you will pay income tax on any subsequent income from e.g. drawdown or annuity. (As with all things pensions and stocks these are generalisations and simplifications, remember tax rules can change and the benefits/terms will depend on your circumstances at the time).

Second, in case this is not a hypothetical question but one based on a real situation, it might be worth pointing out that if you have the risk appetite (and the financial position) to reinvest gains into the higher-risk EIS and SEIS investment schemes, these can both be attractive to investors with a Capital Gains tax bill. Because they invest in early-stage and seed-stage companies, which are more likely to fail than larger companies and are not tradeable (i.e. you need to wait for an exit before you get back capital and any gains), the Government sweetens the deal by allowing you to indefinitely defer CGT (EIS) or claim 50% CGT relief (SEIS).

You’ll be relieved to know you don’t pay income tax on gains.

You pay just Capital Gains Tax (CGT) on gains, and income tax on dividend income (which is subject to its own thresholds).

However, do note that the rate of CGT that you pay ([1]) is dependent on your income tax bracket in the tax year in question (the relevant date being the date you crystallised the gain, in this case the date on the deal note). Here is a link to help calculate the relevant rate:

• https://www.gov.uk/capital-gains-tax/rates

Two other notes in case helpful…

First, if you hold these shares in an ISA, or in a SIPP, both these wrappers give you shelter from both these taxes. Within an ISA or SIPP you can bank as large or small a capital gain as you like, and you won’t be liable for Capital Gains Tax. With a SIPP, of course, once you’re old enough to take the benefits, you can take up to 25% tax free, and you will pay income tax on any subsequent income from e.g. drawdown or annuity.

(As with all things pensions and stocks these are generalisations and simplifications, remember tax rules can change and the benefits/terms will depend on your circumstances at the time).

Second – in case this is not a hypothetical question, but one based on a real situation – it might be worth pointing out that if you have the risk appetite (and the financial position) to reinvest gains into the higher-risk EIS and SEIS investment schemes, these can both be attractive to investors with a Capital Gains tax bill. Because they invest in early-stage and seed-stage companies, which are more likely to fail than larger companies and are not tradeable (i.e. you need to wait for an exit before you get back capital and any gains), the Government sweetens the deal by allowing you to indefinitely defer CGT (EIS) or claim 50% CGT relief (SEIS).

• https://www.wealthclub.co.uk/eis-tax-relief/#capital-gains-deferral
• https://www.wealthclub.co.uk/seis-tax-relief/#50-capital-gains-reinvestment-relief

You’ll be relieved to know you don’t pay income tax on gains.

You pay CGT on gains, and income tax on dividend income (which is subject to its own thresholds).

However, do note that the rate of CGT that you pay is dependent on your income tax bracket in the tax year in question (the relevant date being the date you crystallised the gain, in this case the date on the deal note).

You’ll be relieved to know you don’t pay income tax on gains.

You pay CGT on gains, and income tax on dividend income (which is subject to its own thresholds).

However, do note that the rate of CGT that you pay is dependent on your income tax bracket in the tax year in question (the relevant date being the date you crystallised the gain, in this case the date on the deal note).

Two other notes in case helpful…

First, if you hold these shares in an ISA, or in a SIPP, both these wrappers give you shelter from both these taxes. Within an ISA or SIPP you can bank as large or small a capital gain as you like, and you won’t be liable for Capital Gains Tax. With a SIPP, of course, once you’re old enough to take the benefits, you can take up to 25% tax free, and you will pay income tax on any subsequent income from e.g. drawdown or annuity. (As with all things pensions and stocks these are generalisations and simplifications, remember tax rules can change and the benefits/terms will depend on your circumstances at the time).

Second, in case this is not a hypothetical question but one based on a real situation, it might be worth pointing out that if you have the risk appetite (and the financial position) to reinvest gains into the higher-risk EIS and SEIS investment schemes, these can both be attractive to investors with a Capital Gains tax bill. Because they invest in early-stage and seed-stage companies, which are more likely to fail than larger companies and are not tradeable (i.e. you need to wait for an exit before you get back capital and any gains), the Government sweetens the deal by allowing you to indefinitely defer CGT (EIS) or claim 50% CGT relief (SEIS).