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11/03/2010

Capital withdrawal financial planning tool – what the tool is designed to do

This financial planning tool provides two calculations. One calculates the capital gain on a given withdrawal from an investment while the other calculates the amount of withdrawal which can be made when looking to utilise an individual’s or trustee’s available capital gains tax (CGT) exemption.

The tool provides a guide to any gain or loss created by a withdrawal based on the information input by you. It does not assume any additional allowable deductions which may be available to your client, such as cost of disposal. The tool does not take into account any ‘income’ and assumes the capital value input reflects any increase in value of reinvested income, for example via income or accumulation units. The tool does not consider any ‘matching’ rules.

Where a portfolio consists of, for example, five funds, each calculation needs to be made at individual fund level.

eg  £100,000 invested 
      £20,000 in each fund – A/B/C/D/E 

The figure £20,000 should be inserted in the investment capital amount, and the value of that investment in the fund value before withdrawal.

Five separate calculations would need to be made in this example.

Calculate gain option

This will calculate the gain based on a capital withdrawal from the investment and takes no account of any income received.

The amount of invested capital will need to be reduced every time a withdrawal is made:

eg year one  £100,000 amount of invested capital 
                    £10,000 withdrawal made, of which £7,000 is capital, £3,000 is gain. 

The figure for the next calculation (year two) would be £93,000 for the amount of invested capital. The invested capital amount is reduced by the capital element from year one withdrawal (£7,000), not the total withdrawal amount (£10,000). Where an investment has had previous withdrawals you will need to input the correct, recalculated figure for the remaining invested capital, to ensure the calculation is correct.

Calculate withdrawal option

This will calculate the maximum amount of capital which can be withdrawn from an investment to maximise use of an individual’s or trustee’s available CGT exemption.

How to use the tool

Each input field of this tool is variable.
The default on any numerical input is 0.
It is assumed that all the withdrawal is capital.
To access a particular calculator, choose either of the following from the main screen:

Capital withdrawal planning tool

Please note that where there is no gain, a box will appear to confirm this. Where a loss is created a negative figure will appear.

Download tool.

Skandia accepts no responsibility for actions taken or refrained from being taken following use of this financial planning tool. Skandia accepts no responsibility for unit performance or actual tax liabilities created, based on the principles applied to this tool. Individual circumstances will be different and unit growth is unlikely to mirror the actual assumptions made. This article does not constitute financial advice and Skandia accepts no responsibility for any action taken or refrained from being taken due to this article or related articles and tools.

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