Capital Gains Tax
Published / Last Updated on 06/04/2022
Get Capital Gains Tax Advice 2024
(tax year 06/04/2024 to 05/04/2025)
Capital gains tax (CGT) is a tax on profits or capital gains that you make when you sell or give away certain capital assets that you own.
What is taxed? - The sale price or value on the date you give away an asset less your yearly tax free allowance, less the purchase price is the taxable gain.
How much tax do I have to pay? There have been significant changes to Capital Gains Tax and taper relief, including the removal of taper relief for Individuals, Trusts and Business Assets in 2008 and the reduction of the real rate of tax (non property investments in 2017).
1. Capital Gains Allowance and Rates 2024
Annual Exemption for Individuals £3,000.00
- Individuals, husband and wife spouses and civil partners all have their own exemption.
- This means that you can realise adjusted gains each year to the value of the allowance with no liability to taxes.
Rates of Capital Gains Tax CGT: Individuals - Chargeable gains are added to your taxable income.
- Standard Rate 10.00 %: If your combined income and adjusted capital gain when added together, stays within the basic rate tax threshold, the capital gains tax CGT rate is 10.00 % of the chargeable gain
- Higher Rate 20.00 %: If all or part of the gain when added to income is in higher rate tax threshold, the CGT tax rate is 20.00 % of the gain over higher rate income tax threshold and 10.00 % of the gain below the threshold (if any)
Rates of Capital Gains Tax CGT: Individuals on Investment/Residential Property - Chargeable gains are added to your taxable income.
- Standard Rate 18.00 %
- Higher Rate 28.00 %
Annual Exemption for Trusts - £1,500.00
This means a trust can release adjusted gains each year to the value of the allowance with no liability to taxes. Normally the allowance is for all trusts created by the same person i.e. there is only one allowance for all trusts. The rate of tax charged on a trust is 28%.
Annual Exemption for LPRs (Legal Personal Representives) - £3,000.00
Annual Exemption - Businesses
Nil - there is no annual exemption, all gains are deemed as trading receipts and taxable at normal business or corporation tax rates.
Entrepreneurs Relief Rate for Business Assets.
CGT rate of 10.00 % of the chargeable gain is charged as a concession on the sale of trading businesses and shares with a cumulative lifetime allowance for the individual as follows:
- 06/04/2008 - 05/04/2010 business gain disposals up to £1m
- 06/04/2010 - 22/06/2010 business gain disposals up to £2m
- 23/06/2010 - 05/04/2011 business gain disposals up to £5m
- 06/04/2011 - 05/04/2020 business gain disposals up to £10m
- 06/04/2020 - onwards, business gain disposals up to £1m
Withdrawal of Tiered Rates and Taper Relief Before 5 April 2008:
- Taxes used to be levied based upon your highest rates of income tax. for 2007/2008 and was tiered at: Lower rate taxpayers -10% capital gains tax, CGT Basic rate taxpayers - 20% capital gains tax CGT and Higher rate taxpayers - 40% capital gains tax CGT). Taper relief has also been abolished.
- Rates of Tax - Trusts - The rate applicable to trusts was based upon the trustee and was tax up to 40% for certain types of income/gain to the trust.
2. Paying Capital Gains Tax
None Residential Property Capital Gains Tax (CGT) liabilities are reported as part of your Self Assessment Return but must be reported by 31 December in the tax year after the tax year in which the gain was made and paid in the following January e.g., for Tax Year 06/04/2024 to 05/04/2025, capital gains tax (non-property) is reportable by end of December that year and payable by the usual self assessment deadline e.g., 31/01/2025.
- Our Fees: CGT Non UK Property
Residential Property Capital Gains Tax liabilities are reported in a separate UK Property Account Capital Gains Tax Return and payable within 60 days of the disposal of assets. We offer a separate Residential Property Capital Gains service to complement our normal self assessment service.
- Our Fees: CGT UK Property
3. Capital Gains Tax Calculation
Calculation of Capital Gains Tax CGT - How Capital Gains Tax is Calculated:
Firstly, you need to work out the gain or profit. This is done by deducting from the sale price or valuation on the date a gift is made, things like original purchase price, including legal fees, any money spent on improvements and costs for selling or gifting the property.
Calculation of the gain - Rules after 6th April 2008
- Work out the sale price or market value
- Deduct any costs incurred when buying the asset e.g. legal fees, adviser fees, stockbroker fees, stamp duty
- Deduct any enhancement or improvement costs not maintenance costs
- Deduct any costs incurred in selling the asset e.g. auction fees
- Deduct any capital losses incurred for other assets
- Deduct your annual exemption
- Result is the amount chargeable to tax - the chargeable gain
- Gain is then tax at the current capital gains tax rates
Old Rules: Calculation of the gains realised and made before 6 April 2008
- Work out the sale price or market value
- Deduct any costs incurred when buying the asset e.g. legal fees, adviser fees, stockbroker fees, stamp duty
- Deduct any enhancement or improvement costs not maintenance costs
- Deduct any costs incurred in selling the asset e.g. auction fees
- Deduct any allowed indexation allowance (for assets acquired before April 1998)
- Deduct any capital losses incurred for other assets
- Calculate any taper relief
- Deduct your annual exemption
- Result is the amount chargeable to tax - the chargeable gain
- Gain was added to your income
- It was then taxed at either 10%,20%, 40% depending upon whether you were a lower, basic or higher rate tax band