Taxation of capitalized gains

[Erouan]

Hello everyone,

I’m currently simulating the growth of a portfolio over a one-year period using a strategy of systematically reinvesting monthly gains (the famous compound interest effect). On paper, the projections look promising, but I’m stuck on the tax implications here in the UK. If the profits are not withdrawn from the account but directly reinvested to increase the principal each month, does HMRC consider tax to be due on each theoretical monthly gain? Or do we only report the total net amount at the end of the tax year? I’d like to avoid skewing my profitability calculations by forgetting to set aside funds for taxes as I go along.

[AGoodman]

You make a gain/loss when you dispose of an asset. It makes no difference whether you leave the funds in the account, withdraw them or reinvest them.