Capital Gains Tax

Capital Gains Tax is a tax paid on any profits you make when you sell or dispose of an asset.

You are taxed on the gain you make, not the money you receive.

Some assets are tax free and you won’t pay capital gains tax if your total gains in a tax year are below your tax free allowance. This allowance is currently £12,300 per annum.

Capital gains tax is payable on disposal of property, shares, business assets, most personal possessions worth £6,000 or more and Crypto Assets such as Bitcoin.

Assets which are not chargeable to Capital Gains Tax are, your main home, your car, shares that are ISA or PEP, government gilts and premium bonds; gambling winnings or assets you gift to your spouse or civil partner.

If you have shared ownership of an asset you are liable for Capital Gains Tax on your share of the asset.

If you have disposed of an asset and made a loss, you can offset this loss against gains in the same or future years, to reduce your tax liability.

If you are a sole trader, self employed or in a partnership you may have to pay Capital Gains Tax if you dispose of a business asset, such as property, plant or equipment or shares.

Various reliefs may be available to reduce your tax liability. These include:

• Business asset disposal relief

• Business asset rollover relief

• Incorporation relief

• Gift/Hold over relief

Detailed guidance on reliefs can be found at gov.uk/capital-gains-tax-businesses/relief

Limited companies do not pay Capital Gains Tax, instead they pay Corporation Tax on any gains.

Calculate your capital gains for each tax year from 6 April to 5 April. All gains, other than from the sale of residential property after 6 April 2020, should be reported as part of your self assessment tax return which needs to be submitted to HMRC by 31st January following the end of the tax year and any capital gains tax will also be payable by this date.

You must report and pay any tax due on UK residential property using a ‘Capital Gains Tax on UK property’ account within 60 days of selling it. (This does not apply to your home).

Because the timescales are tight, if you are thinking about selling, let us know.

We recommend that you set up your ‘Capital Gains Tax on UK property’ account as soon as you can. Tell us your:

• account number and

• UK postcode.

Once we have this information, we will ask you to authorise us as your agent.

Read more about Rental Income.

A gain which falls within the higher rate taxpayer bracket for income tax will be taxed at 28% on the sale of residential property, and at 20% on the disposal of any other chargeable assets.

A gain which falls within the basic rate taxpayer bracket will be taxed at 18% on the sale of residential property and at 10% on the disposal of any other chargeable assets.

Keep any receipts, bills or other documentation to support:

• The price you originally paid for an asset

• Any additional costs - e.g professional fees, property improvement costs, stamp duty

• Valuations

• Amount you received for the asset