General Investment Accounts

If you’ve used your ISA allowance, but still have money left to invest, you may be considering using a General Investment Account (‘GIA’). These have no limits on your contributions or withdrawals, but your investments are subject to tax.

Tax not only takes a bite of your investment returns, but also adds an admin burden to track and report.

This page is intended to help you get started navigating taxable investments, if you decide they’re right for you.

Should you use a GIA?

If you have ISA allowance available, you should use that first.

You should then think about whether a pension contribution is a better plan. A pension will generally be significantly more tax efficient than a GIA, as well as less admin. The main reason to use a GIA over a pension is if you expect to need the money before the ‘normal minimum pension age’, and you have no ISA allowance remaining.

You may need use a GIA for a limited period of time, for example while transferring a lump sum into your ISA that requires multiple years’ allowances. Or you may hold one for the long term, for example if you are able to use your entire ISA allowance each year out of income.

Why is investing in a GIA less tax efficient than using an ISA or pension?

Unlike an ISA or pension, when investing in a taxable investment account, your investments are liable for:

Capital Gains Tax on the increase in value of your investments when they’re sold.
Income tax on dividends and interest

Note that paying tax on your investment returns will never leave you worse off than if you had not invested at all. That said, you can certainly be worse off than if you’d made the same investments in a tax-efficient account like an ISA or pension!

When comparing investing in a GIA to risk-free savings or mortgage overpayments, you should take tax into account and use post-tax returns, as you would with taxable savings.

Why is investing in a GIA more admin than using an ISA or pension?

When investing in a GIA it is up to you to organise your investments in a tax efficient way, such as making sure to use your Capital Gains Tax allowance each year.

HMRC will not automatically calculate the tax you owe as a result of your GIA investments the way they do for PAYE income or savings interest. You must keep your own records of your investing activities, and report them to HMRC yourself to calculate how much you owe.

This can all get fiddly, and it’s intimidating to get to grips with, which is why we have written this page to help guide you through.

Due to the nature of this topic, this wiki page is by necessity on the longer side. But if you are considering opening a GIA, it is worth taking the time to read thoroughly before you open your GIA and begin investing, as some technical details about your investment choices (e.g. what type of funds you choose, or how often you buy and sell) which you don’t have to worry about in an ISA or pension will have an impact on your tax affairs when using a GIA.

You also have the option of paying an accountant to prepare your returns for you. But it is very possible to DIY this - especially if you set your investments (and spreadsheets) up with this goal in mind from the start. Throughout this page we’ll highlight ways you can keep your your investments tax-efficient and simple to administer.

Capital Gains Tax

In simple terms, capital gains tax is a charge on the sale price of an investment, after taking away the purchase price and any associated costs. For example, if you bought an investment at £5,000 and later sold it at £9,000, that is a gain of £4,000.

CGT only applies when you sell your investment. The fluctuations in value while you are holding an investment are not relevant, only the prices at which you bought and sold.

Your CGT allowance

Every UK resident individual has a Capital Gains tax-free allowance of £3,000 per year. For capital gains above £3,000, you pay CGT at rates determined by your income tax bracket.

This allowance is use it or lose it. You cannot use previous years’ allowances.

CGT and losses

Capital losses are set against gains in the same year. For example, if last year you sold one investment with a gain of £4,000, and another with a loss of £1,750, your capital gains for the year would be £2,250. In this situation, your gains are within the £3,000 CGT allowance and there is no tax to pay.

If you have a net loss (your losses exceed your gains, not just bringing them below the allowance), you can ‘carry forward’ the unused amount to reduce your tax bill in future years. For example, if last year you sold one investment with a gain of £4,000, and another with a loss of £10,000, that means £6,000 of your losses were not able to be ‘used’ this year. This unused loss can be reported to HMRC and used to offset gains in future years.

Losses from previous years can be used to reduce your gain to just the CGT allowance. For example, if the following year you had a CGT gain of £4,000, you could use £1,000 of your £6,000 losses to reduce your gain to £3,000, then carry forward the remaining £5,000 for use in future years.

To carry forward losses, you have to register them with HMRC within 4 years of the loss. This is usually done via self assessment. Once registered, there is no deadline by which to use them.

For more information, see:

Section 104 pool

If you have made multiple purchases and sales of the same investment, your CGT won’t be as simple as the examples above, which had one purchase price and one sell price for each investment.

If you buy into an investment fund at different prices and different amounts over the years, what do you put as the ‘buy’ price when you come to sell?

To calculate this you need to work out the effective purchase price, also known as a Section 104 holding. For more information on this, see

‘Bed and breakfast’: the same day and 30 day rules

The ‘bed and breakfast’ rule is in place to stop people creating a gain or a loss while keeping the same investment. For example, by selling just enough to use up the annual £3,000 allowance then buying straight back in to continue their investment.

When you repurchase the same investment on the same day or within 30 days, the full gain built up over the total time that the shares were owned is not crystallised. When these same shares are disposed of in future, the original acquisition cost will be used to calculate the gain, rather than the repurchase cost.

Note the sale and repurchase still happened, and will be included in your CGT calculations. See links below for more info and worked examples:

‘Bed and breakfast next door’: switching to a similar investment

If you wish to crystallise your CGT gains/losses but don’t want to wait 30 days before reinvesting, you can re-invest into a different fund - one that is similar enough to meet your investing needs, but does not count as the same asset for the 30 day matching rule.

Working out what counts as the same investment can get complicated in some cases, but when it comes to index funds, different funds from different providers are not the same asset, even if they invest in the same index. For example, selling Vanguard FTSE All-World Index ETF and buying Invesco FTSE All-World Index ETF on the same day does not count as the same asset, despite tracking an identical index.

Moving between share classes of the same fund, for instance from an accumulation class to an income class, or from an old expensive class to a cheaper one, is usually treated as a ‘reorganisation’, which isn’t a disposal for CGT, so no gain arises and the pooled cost carries across.

For more information on this see:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg51560#IDATR33F

‘Bed and ISA’: moving investments to your ISA

The term ‘Bed and ISA’ was derived from ‘Bed and Breakfast’, and is sometimes referred to by brokers or online guides. It simply means to sell assets in your GIA and re-buy them within your ISA.

You can do this in one day, if your broker allows. There is no same-day or 30 day rule to worry about, because investments held within an ISA are treated separately from the same investments held outside one.

Note that re-buying the asset in your ISA does not affect the CGT you may owe for the sale in your GIA. You owe the same amount as if you had sold your investments and withdrawn the money to spend. It is simply that investments in your ISA are able to grow tax free from that point onwards.

Gilts and qualifying corporate bonds

Gilts and qualifying corporate bonds are exempt from capital gains tax, so a gain on selling them isn’t taxable and a loss on them isn’t allowable. The interest is still taxable as income in the normal way. That makes their treatment in a GIA quite different from shares and index funds, but is outside of the scope of this wiki.

For more information on this see:

https://www.moneysavingexpert.com/savings/uk-gilts-lower-tax-savings/

Income tax

Income tax on dividends

Dividends received from funds or shares (including dividends reinvested in Acc funds) are subject to income tax.

You get a £500 dividend allowance per year. The rate of tax paid for dividends above the allowance depends on your income tax rate. See https://www.gov.uk/tax-on-dividends.

Note that when you buy a fund that pays dividends (whether Acc or Inc), part of the first distribution after your purchase is treated as a ‘return of your own capital’, known as an ‘Equalisation’ payment, rather than income.

For example, if a fund pays dividends every quarter, and you invest one month before a payment, you will receive the full dividend payment even though you were not invested for the full amount of time. Only 1/3rd of that payment is income, and the other 2/3rds is treated as a ‘return of your own capital’ or Equalisation. For more information see Aberdeen Techzone - Equalisation payments.

Note: the equalisation amount can be taken off the s104 pool, to reduce your cost basis. See our example table below

Income tax on interest

Interest received from investments (typically bond funds, gilts, and any cash sitting uninvested in the account) is charged at your usual income tax rate.

This is calculated after any earned income but before dividends. For more information on this, see Aberdeen Techzone - Order of Taxation.

Part or all of this income might fall within your personal savings allowance, or the starting rate for savings.

Income from investments counts towards your Adjusted Net Income

Note that while you may not owe any income tax for dividends and interest earned if they are within your dividend allowance and personal savings allowance, these allowances are ‘nil rate bands’ rather than true allowances. Income within them is taxed at 0%, but it still counts towards your total income for the year and uses up part of a tax band.

This means it can push your overall income into a higher band, for example reducing or removing your personal savings allowance, reducing your personal allowance, or pushing you over a threshold such as the High Income Child Benefit Charge. See our tax traps page for more information.

Choosing funds within a GIA

When investing in pensions or ISAs, choosing between an accumulating or distributing fund, or an ETF or OEIC, largely comes down to personal preference and/or broker fees. When investing in a GIA these technical choices can have impacts on your tax affairs.

Accumulating vs Distributing funds

Distributing funds pay out dividends as income, while accumulation funds use those dividends to buy more of the assets within the fund and increase the value of the fund units. This accumulation is convenient in an ISA or pension as it saves you effort (and potentially fees) in re-investing the dividends.

However, dividend income is still taxable whether it is automatically reinvested or distributed, so when investing in a GIA, having dividends rolled into the fund value makes tracking your tax liabilities harder.

Also, as the dividends reinvested in an accumulation fund are subject to income tax, this has to be added to the Section 104 pooled cost, otherwise the same money is taxed a second time as a capital gain when the holding is sold.

In order to keep track of these, you need to find and record the accumulation figure every time a distribution is paid, often several times a year, for as long as the fund is held. This information is not always provided by your broker, you will need to go to the fund provider’s websites to look it up.

Distributing units avoid this problem, because the income is paid out, and if you reinvest you increase the number of units held rather than the value of the units.

For these reasons, when investing in a GIA it makes sense to use distributing (‘Inc’) funds wherever possible, to save you a headache down the line when calculating capital gains.

Mutual funds (OEICs) or ETFs

The main difference is that OEICs are always ‘domiciled’ (legally established) in the UK, while ETFs are domiciled overseas, generally in Ireland or Luxembourg.

Investing in an overseas fund has a number of implications when investing in a GIA.

Note a fund’s domicile is different from where the fund is listed, or what currency it’s priced in. For example, an Irish-domiciled ETF bought in sterling on the London Stock Exchange is still an overseas fund.

It also isn’t about where the underlying investments are. A UK-domiciled OEIC holding global shares pays UK dividends, because HMRC treat the fund as the source of the dividend, not the underlying investments.

1. Tax return complexity

Where a fund is domiciled changes how the income is reported on your tax return. Distributions from an overseas fund are foreign income, and normally go on the foreign pages rather than in the UK dividend or interest boxes. Where foreign dividends are your only foreign income, come to less than the relevant threshold, and you aren’t claiming foreign tax credit relief, they can go on the main return instead.

Irish and Luxembourg funds don’t deduct withholding tax from distributions to UK investors, so there’s usually no foreign tax to reclaim even though the income sits on the foreign pages.

2. Reporting fund status

Any fund domiciled outside the UK is an ‘offshore fund’ for tax purposes, and how a gain on selling it is taxed depends on whether HMRC has granted the fund reporting fund status.

If the fund is a reporting fund, selling it produces an ordinary capital gain: CGT rates apply, the annual exempt amount applies, and capital losses can be set against it. If it isn’t, the gain is an ‘offshore income gain’ and is taxed as income at your marginal rate instead, with no annual exempt amount and no ability to reduce it with capital losses.

Almost all of the funds and ETFs marketed to UK investors have reporting status, but it is granted per share class and for particular periods, and a fund can leave the list. HMRC publishes the list of approved reporting funds, which can be searched for the specific fund and share class held.

Generally speaking it is not possible or practical to purchase non-reporting funds through UK brokers, but people have been caught out by the non-reporting rules when moving, for example, from the US to the UK, whilst holding widely-known US funds such as VTI or VOO, and then finding they have a tax headache in the UK.

3. Excess reportable income

An overseas reporting fund has to report to HMRC and to its investors how much income it earned in each reporting period. Anything earned but not paid out within six months of the end of that period is ‘excess reportable income’, and it is taxable as though it had been received, even though nothing arrives in the investor’s account.

Accumulating share classes of overseas reporting funds produce a full year of excess reportable income because they don’t distribute. Distributing share classes usually produce a small amount, because funds rarely pay out to the last penny.

ERI is taxable on whoever held the shares at the end of the fund’s reporting period, based on the number held at that moment, so buying the day after a period end means owing nothing for that period, while selling the day after one means still owing for it.

ERI is treated as arising on the ‘fund distribution date’, six months after the period end. This date determines what tax year it falls within. A fund with a 31 December period end has a fund distribution date of 30 June, falling in the tax year that began that April.

The practical difficulty is that there is no established way of reporting this to end-investors. Excess reportable income doesn’t usually appear on a consolidated tax certificate, and there’s no de minimis below which it can be ignored.

In order to fully determine ERI, you need to acces the fund manager’s own website, open their UK reporting fund data for the period, locate the share class by ISIN, take the figure quoted per share in the fund’s currency, multiply by the number of shares held at the period end, and then convert to sterling if priced in another currency.

Excess reportable income is added to the Section 104 pooled cost. Income tax has been paid on money that wasn’t received.

Overseas shares held directly

Whilst investing in individual companies is not the focus of this wiki, it should be noted that shares in overseas companies held directly are taxed on the same basis as UK shares, but the country the company is in may deduct withholding tax before the dividend reaches you.

For US shares the rate is 15% where a W-8BEN form is in place with your broker, and 30% where it isn’t.

Where foreign tax has been deducted, foreign tax credit relief can usually be claimed on a tax return, limited to the lowest of the foreign tax paid, the rate the relevant treaty allows, and the UK tax due on that income.

Shares priced in a foreign currency also have to be pooled in sterling, converting each purchase and each sale at the rate on the day it happened, so exchange rate changes can impact the relative gain and loss.

Reporting your CGT and income tax

To report and pay your tax, you usually need to file a Self Assessment tax return.

In some cases, you may be able to use the ‘real time’ Capital Gains Tax service to report your CGT, and contact HMRC separately to adjust your tax code for income tax. This is a new service without many details, so we don’t yet have a guide.

If you’re unsure whether you need to submit a Self Assessment, HMRC’s has a tool to check.

Keeping records

Keeping records for GIA sales and purchases is much more important than ISAs and pensions.

Income tax: You should receive a ‘consolidated tax certificate’ from your broker each year, in time for you to file a tax return, which shows all dividends and interest received in the previous tax year, split between UK and overseas income, and whether any tax was taken at source.

Note this doesn’t usually include Excess Reportable Income from ETFs, and on some platforms it doesn’t include the accumulations paid inside accumulation units either. (You can avoid needing to look these up separately by investing in distributing OEICs).

CGT: As CGT is only owed when you sell, it can be easy to forget to keep records as you go along. But you will need them!

If you don’t keep your own records, when it comes to selling you will either have a headache finding and backfilling the missing information on your older transactions, or potentially you will need to list your buying cost as zero, resulting in too much CGT paid due to poor record-keeping.

The simplest approach is to use a spreadsheet to record each transaction: the date, number of units, and total cost of each purchase and sale, including any dealing charges and stamp duty (if applicable) paid.

If ERI or equalisation applies, this also needs adding as a separate line item.

Example of a single-fund record table

#	Date	Transaction	Cash	Pool units	Pool cost	Gain
1	01/05/2024	Buy 1,000 at £10.00	£10,000 paid	1,000	£10,000
2	28/02/2025	Accumulation 30p per unit, of which 12p equalisation	None	1,000	£10,180
3	15/05/2025	Buy 500 at £11.00	£5,500 paid	1,500	£15,680
4	10/09/2025	Sell 600 at £12.00	£7,200 received	1,500	£15,680	£120
5	25/09/2025	Buy 600 at £11.80	£7,080 paid	1,500	£15,680
6	15/12/2025	Sell 900 at £12.50	£11,250 received	600	£6,272	£1,842

To calculate how much CGT you owe from these transactions, you can use an online calculator like CGTCalculator. But if you’re struggling you may prefer to pay an accountant to complete the calculations for you.

Other things to consider

Moving a GIA between brokers

Transferring the same funds or shares to a new platform without selling them, usually described as an in specie or stock transfer, isn’t a disposal. This means that the Section 104 pool shouldn’t be affected. However, the new platform won’t have the cost history, so it needs to be kept separately for your records.

Transferring by selling everything and rebuying at the new broker, which is sometimes offered as the faster option, is a disposal of the entire holding. It can produce a large and completely avoidable tax bill, as well as leaving the money out of the market while it moves.

Transfers between spouses and civil partners

Transfers between spouses and civil partners who live together are made on a ‘no gain, no loss’ basis, so no CGT arises on the transfer and the receiving partner takes on the original pooled cost.

In practice, this gives a married couple two annual exempt amounts, and an asset can be moved to whichever partner pays the lower rate before it is sold.

The bed and breakfast rule only applies where the same person buys back, so one partner selling and the other buying the same investment in their own account isn’t caught by it.

Jointly held accounts

GIAs can be held as joint accounts, unlike ISAs or pensions.

All of the tax information holds true for jointly held accounts, but each party is responsible for a share of any income or capital gain, and can set their own allowances against that share.