Capital Gains Tax: Key Info – 21/06/2021

Capital Gains Tax (CGT) is a tax on the profit when you sell (or ‘dispose of’*) an asset that has increased in value – it is important to note that it is not the amount of money you receive that’s taxed but what you gain.

*’Disposing of’ an asset includes:
  • Selling it
  • Giving it away as a gift
  • Swapping it for something else
  • Getting compensation for it
You pay CGT on the gain when you sell:
  • Most personal possessions worth £6,000 or more
  • Property that is not your main home
  • Your main home if you’ve let it out, used it for business or it’s very large
  • Shares that are bot in an ISA or PEP
  • Business assets

CGT is only paid on your total gains above an annual tax-free allowance; the Capital Gains tax-free allowance is:

  • £12,300
  • £6,150 for trusts
You also do not pay CGT on:
  • ISAs or PEPs
  • UK government gilts and Premium Bonds
  • Betting, lottery, or pools winnings
CGT is not paid on on assets you sell/give to your husband, wife or civil partner unless:
  • You separated and did not live together at all in the tax year
  • You gave them goods for their business to sell on

Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.

You do not have to pay CGT on assets you give away to charity. You may have to pay if you sell an asset to charity for both:
  • More than you paid for it
  • Less than market value
You will need to report your gains in your tax return if:
  • The total amount you sold the assets for was more than 4x your allowance
  • You are registered for Self-Assessment

You pay a different rate of tax on gains from residential property than you do on other assets.

If you are a higher or additional rate taxpayer, you’ll pay:
  • 28% on your gains from residential property
  • 20% on your gains from other chargeable assets
If you are a basic rate taxpayer, the rate you pay depends on the size of your gain, your taxable income and whether your gain is from residential property or other assets:
  • Work out how much taxable income you have
  • Work out your total taxable gains
  • Deduct your tax-free allowance from your total taxable gains
  • Add this amount to your taxable income
  • If this amount is within the basic Income Tax Band, you’ll pay 10% on your gains and 18% on residential property. You’ll pay 20% on your gains and 28% on residential property on any amount above the basic tax rate

You can report losses on a chargeable asset to HMRC to reduce your total taxable gains.

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