A guide to General Investment Accounts

General Investment Accounts may be liable for Capital Gains Tax (CGT), dividend tax and income tax. The investor is often responsible for reporting taxable events to HMRC, typically via a Self Assessment tax return.

Capital Gains Tax

When you sell an investment for more than its purchase price, the difference is your capital gain. CGT is charged on the profit, or total gains, you realise in a tax year after deducting your allowance.

• For the 2025/26 tax year the annual CGT exemption is £3,000 (or £6,000 for a couple if the investments are jointly owned and the gain is split equally).[1]
• Gains above this threshold are taxed at:
  • 18% for basic rate taxpayers
  • 24% for higher rate taxpayers

One common point of confusion is that the CGT allowance applies to gains, not the amount you sell. This means you can sell far more than £3,000 worth of investments and still stay within your allowance, depending on how much of that sale represents actual gain.

For example, imagine you and your spouse have £75,000 invested in your GIA. Let’s say it grows by 5% over the year, increasing in value to £78,750. Your total unrealised gain is £3,750. If you now sell the entire portfolio, you will realise that gain which would be within the £6,000 joint annual allowance.

Now, here’s the clever part. A good financial adviser will be able to use your allowance intentionally, every year, so you can benefit from it. Let’s continue with the example. So, after the first year, your £75,000 had grown to £78,750. Let’s assume you are invested in a single fund. At the end of the tax year, the adviser will sell the entire fund (so all your investments) realising the £3,750 of gain, effectively meaning you now have the full £78,750 in cash. Except, rather than giving you the cash, the adviser will now re-invest that full sum. This means you will re-base that value and start the next tax year with a £78,750 investment with no gain. This strategy doesn’t remove CGT by simply reinvesting – it works only if the gains you realise (after any losses) stay within your available annual exemptions (£3,000 each, so up to £6,000 for a couple where gains are split between both individuals).

Let’s assume that then grows by another 5% over the year to just under £82,700. And again, at the end of the tax year, the adviser will sell all the fund, re-basing the value and then re-investing the proceeds so you start the next tax year with the same amount but no gain, and so on. And importantly there is still no capital gains tax to pay as the gains fall within the joint annual allowance of £6,000.

This might look something like this:

There is a small rule that’s worth pointing out known as the 30 day bed and breakfast rule, which means you can’t just sell and re-invest in the same fund, in the same account straight away.[2] You must wait 30 days to re-invest. It’s not an issue though as some advice firms will have a fund available that looks similar to your current fund which they can use to do this sale and reinvestment process for their clients.

As you can tell, CGT can be complicated. Speaking to a financial adviser is recommended.

Income tax

General Investment Accounts can generate income in two main forms, either as interest or dividends (we go into dividend tax below). Any interest earned from fixed-income investments (such as corporate bonds, gilts, or cash holdings within the GIA) is subject to income tax.

Interest received into a GIA is considered income. This is added to your total taxable income for the year and taxed at your marginal rate. These rates are[3]:

• 20% for basic rate taxpayers
• 40% for higher rate taxpayers
• 45% for additional rate taxpayers

Most individuals have a personal savings allowance. Any interest above this allowance is taxed at the rates above. The current personal savings allowances are below:

• £1,000 for basic rate taxpayers
• £500 for higher rate taxpayers
• £0 for additional rate taxpayers

Dividend tax

If you hold shares or equity-based funds within a General Investment Account, you may receive dividends. Unlike ISAs or pensions, GIAs are subject to dividend tax.

Each tax year you get a dividend allowance of £500 (2025/26), anything above this you will be taxed at the following rates[4]:

• 75% for basic rate taxpayers
• 75% for higher rate taxpayers
• 35% for additional rate taxpayers

From April 2026, dividend tax rates will increase by two percentage points for basic and higher rate taxpayers. They will increase to 10.75% and 35.75% respectively. The additional rate will not change. [5]

How do General Investment Accounts work?

Within a GIA, there are two common structures for holding investments: funds and segregated portfolios. Understanding the difference is important as it affects how and when you pay CGT.

Funds in a GIA

When you invest in a fund, such as a unit trust or OEIC, you own units in that fund rather than the underlying securities. The fund manager can buy and sell investments within the fund without creating a taxable event for you.

CGT only applies when you sell your units in the fund, giving you control over when that liability arises. However, if the fund pays out income, such as dividends or interest, these may be taxable in the year they are received when held in a GIA. But it’s important to remember that any income the fund pays out may still be taxable each year in a GIA. This structure can simplify tax reporting and allows managers to rebalance portfolios without triggering CGT for individual investors.

Segregated portfolios in a GIA

A segregated portfolio is a bespoke arrangement where you hold individual securities directly, often managed by a discretionary wealth manager. In this structure, every trade that realises a gain within your portfolio is a taxable event for you. This means CGT can apply multiple times throughout the year, and you may need to report numerous transactions to HMRC.

While segregated portfolios offer customisation and direct ownership, they can lead to higher administrative complexity and less control over the timing of taxable events.

What is right for you?

Which structure you decide for your GIA will depend on your priorities. Funds can provide simplicity and the ability to defer CGT until you decide to sell, whereas segregated portfolios offer tailored investment strategies but require careful tax planning and record keeping. Speaking to a financial adviser is recommended to understand what is best for you and your personal circumstances.

GIAs vs ISAs

ISAs are one of the most tax-efficient investment wrappers available to UK investors. [6]  Any growth, dividends, or interest earned inside an ISA is completely tax-free, and withdrawals do not trigger any tax either. The main limitation is the annual contribution cap, which is £20,000 for the 2025/26 tax year.

GIAs have no contribution limits and typically allow withdrawals at any time though you may need to sell investments first. The trade-off is that gains, interest, and dividends within a GIA are taxable and must be reported to HMRC where applicable.

In short:

• ISAs offer tax efficiency but limited capacity.
• GIAs offer unlimited capacity but no tax shelter.

Many investors use both as part of a layered investment strategy.

Is a General Investment Account right for you?

As discussed, a GIA is particularly beneficial for those who have maximised their ISA and pension contributions for the tax year. With no contribution limits and no withdrawal restrictions, a GIA provides a flexible home for surplus capital. It also offers a wide choice of investments and, when managed alongside other wrappers, it can support strategic tax planning.

In saying that, there are some disadvantages. Namely, all investment gains, interest and dividends above any allowance limits within a GIA may be taxable above allowances, which can affect long term returns. Investors are also exposed to market risk and must keep on top of the administrative requirements of reporting taxable events.

As with any investment decision, it’s important to consider how a GIA fits into your broader financial plan and to seek professional guidance where appropriate.