What tax will I need to pay on a general investment account?

Investing can be a good way to build your wealth over the long term. But if you make a profit, you may not be able to keep all of it. There could be tax to pay on those gains. We’ll explain when you’ll have to hand some of it over to HMRC.

Profit on investments isn’t guaranteed, as the value of your investment can fall as well as rise and you may get back less than you’ve paid in. 

If you’re using a general investment account (GIA) you’ll need to pay tax on any profits when you come to sell them – or if you receive dividends. The size of the tax on this investment income will depend on your profits, the type of investments and your personal tax situation. We have more information on how a GIA works. 

It’s possible to invest in a more tax-efficient way by using either a stocks and shares ISA or a pension.

Tax rules are subject to change and are based on your personal circumstances. 

Capital Gains Tax

You pay Capital Gains Tax (CGT) on profits you make from selling assets - or disposing of them, by transferring ownership to someone else. These can be anything from stocks and shares and investment property to items you own that have increased in value, like antiques.

Everyone has a Capital Gains Tax allowance. For the tax year 2024/2025 it’s £3,000. So, in any tax year, you can make that much profit in total from any investments before paying CGT.

After that the amount you’ll pay is based on your personal tax rate. If you sell assets that qualify for capital gains, including any additional properties you own, you'll be be taxed at 18% if you're a basic rate taxpayer or 24% if you're a higher rate taxpayer. 

There are some exceptions to CGT. The sale of your main home is usually exempt, as is the sale of personal belongings up to £6,000. There are also different tax breaks for business assets like farm equipment.

Stamp Duty Reserve Tax (SDRT)

This is a tax on buying UK shares and corporate bonds online. The rate of SDRT is 0.5% of the price you pay for the shares. You’ll normally pay the SDRT automatically when you’re buying your shares.

Overseas shares, like those on the US market, are exempt from SDRT, as are government bonds (gilts). 

Tax on dividends

Some shares will make regular cash payments as an incentive for owning them. These are called dividends. There’s an annual dividend allowance before you pay any tax. For the tax year 2024/2025, it’s £500.

Beyond that, you’ll again pay tax based on your personal tax rate. For basic rate taxpayers that’s 8.75%, for higher rate taxpayers it’s 33.75%, and additional rate taxpayers will pay 39.35%. 

Interest Income

If any of your money is held as cash or bonds in your GIA and you’re earning interest on it, that may also affect your tax bill. You have a Personal Savings Allowance (PSA) that applies to any interest paid. Based on your personal tax rate that’s £1000 tax-free for basic rate taxpayers, and £500 for those on the higher rate. Additional rate taxpayers don’t get any PSA.

Once your PSA is removed from the interest paid, that amount is added to other taxable income like your salary. You then pay tax on the whole amount at the marginal rate below.

• 0% on the first £12,570 – personal allowance
• 20% on £12,571 to £50,270 – basic rate
• 40% £50,271 to £125,140 – higher rate
• 45% over £125,140 – additional rate

Letting HMRC know about tax on investments

If you have investment income you may need to register for Self-Assessment. You can do this online by visiting the HMRC website.

Get together all the information about your investment income, dividends, savings interest and capital gains for the tax year. Fill out your return and the system will calculate any tax you owe automatically.

The deadline for submitting your return is 31st January 2026 for the 2024/2025 tax year. You’ll need to pay any tax owed by that date too – to avoid any fines or interest charges.

If you’re having trouble working it all out, it could be a good idea to speak to an accountant.