"Deemed disposal is a complex tax that takes the joy out of investing in index funds, but there are ways to reduce its impact"
"I have been running monthly meet-up groups on personal finance and financial independence since 2019, and not a meet-up goes by that I don't hear the term "deemed disposal"."
"Deemed disposal is a tax on index funds that fall outside the standard capital gains tax rate of 33pc."
Deemed disposal is a complex tax that applies to index funds that do not qualify for the standard 33% capital gains tax treatment. The rule can reduce net returns and diminish investor enthusiasm for long-term passive investing. The term 'deemed disposal' is commonly used among investors and personal finance communities. Despite its complexity and potential cost, practical strategies exist to reduce the tax's impact through careful asset location, timing of purchases and sales, and use of tax-efficient wrappers. Understanding eligibility rules and planning around them can materially improve after-tax investment outcomes.
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