Taxes toggle

Also seen as: Taxes, taxation

What does turning taxes on change?

Turning Taxes on applies your saved tax settings to the run and deducts the resulting tax from its results. Those settings are your tax residency, your tax regime, the short-term and long-term capital-gains rates, and the dividend tax rate.

Two kinds of event are taxable, and one is not:

• Realized gains — a position closed at a profit is taxed at the applicable capital-gains rate.
• Dividends — dividend income is taxed at the dividend rate, so the strategy is credited the net amount.
• Open (unrealized) gains are not taxed: a holding you still own has not produced a taxable event, however far it has risen.

With the toggle off, the tax line is zero and every figure is gross of tax.

Defaults in Fincanva

• Taxes is off by default, so the first figures you see are gross of tax.
• Flipping it switches the displayed result immediately, with no new run — the after-tax variant was pre-computed when the strategy ran (see simulation assumptions).
• The tax deducted appears as the "Taxes" band in the capital and P&L breakdown.
• The rates behind the toggle are saved settings: editing one is a settings change that takes effect only after the strategy runs again.
• The toggle is independent of the costs toggle — you can view a run after tax but before costs, or any other combination.
• The Holdings view does not follow this toggle: it always reports with taxes off, one of its Holdings forced assumptions.

Worked example

One run, two views. With Taxes off a strategy's curve ends at a total return of +42.0%, gross of tax. Flip Taxes on and the same curve ends lower — say +34.8% — because the gains the strategy realized along the way were taxed at the capital-gains rate and each dividend was credited net of the dividend rate. When that tax actually leaves the simulated account depends on the tax regime — as events occur under Administered, once a year under Declarative — rather than at the moment of every individual gain. The 7.2pp difference is not a different strategy or a different period: it is the same run with the tax that its trades and dividends would have triggered taken out. A strategy that realizes gains often meets that deduction more often than one that holds its winners.

The figures on this page describe what Fincanva models, not what you should do with your money — see Is this financial advice?.