UK Capital Gains Tax Calculator: Rates and Allowances Explained

How to Calculate Capital Gains Tax (CGT) in the UK

Capital Gains Tax (CGT) is a tax on the profit made when you sell or dispose of an asset that has increased in value. Whether you’re selling property, shares, or other investments, understanding CGT is essential to managing your financial responsibilities. This guide explains how to calculate CGT in the UK, including allowances, rates, and expert tips from Fraser Bond.

What is Capital Gains Tax?

CGT is paid on the gain or profit made when disposing of certain assets. The tax is not on the total sale price but the increase in value since acquisition.

Examples of taxable assets:

• Properties (not your primary residence)
• Shares and investments
• Valuable possessions like art or jewellery

How to Calculate Capital Gains Tax

1. Determine the Gain:
   Subtract the purchase price (or acquisition value) and allowable expenses (e.g., legal fees, stamp duty) from the sale price.

   Example:

   • Sale price: £300,000
   • Purchase price: £200,000
   • Allowable expenses: £10,000
   • Gain: £300,000 - (£200,000 + £10,000) = £90,000

2. Apply the Annual CGT Allowance:
   For the 2023/24 tax year, individuals have a tax-free allowance of £6,000 (£12,300 in previous years). Deduct this from your gain.

   • £90,000 - £6,000 = £84,000 taxable gain

3. Determine the Tax Rate:
   CGT rates vary depending on the asset type and your income tax band:

   • Basic rate taxpayers: 10% (20% for property gains)
   • Higher/additional rate taxpayers: 20% (28% for property gains)

   Example:
   If you’re a higher-rate taxpayer selling a property, the CGT liability is:

   • £84,000 x 28% = £23,520

4. Report and Pay:
   CGT on property sales must be reported within 60 days of completion. Other gains can be reported in your annual self-assessment tax return.

Key Allowances and Exemptions

• Primary Residence Relief: No CGT is due on the sale of your main home.
• Spousal Transfers: Assets transferred between spouses or civil partners are exempt from CGT.
• ISAs: Investments held in Individual Savings Accounts are CGT-free.

Tips to Minimise CGT

1. Utilise Allowances:
   Make the most of your annual CGT allowance before the tax year ends.

2. Offset Losses:
   Deduct capital losses from other investments to reduce your taxable gain.

3. Timing Matters:
   Consider selling assets in different tax years to spread out gains and utilise allowances.

4. Seek Professional Advice:
   Working with experts like Fraser Bond ensures you explore all tax-saving opportunities.

How Fraser Bond Can Help

Fraser Bond provides tailored guidance to help you manage your CGT liabilities effectively:

• Accurate Calculations:
  We assist in determining your CGT liability with precision.

• Tax Planning Strategies:
  Our experts identify opportunities to minimise CGT through strategic planning.

• Property-Specific Advice:
  Selling investment properties? We offer solutions to reduce your tax burden.

• Comprehensive Support:
  From filing returns to liaising with HMRC, we provide end-to-end assistance.

Conclusion

Calculating Capital Gains Tax in the UK doesn’t have to be daunting. With the right tools, knowledge, and expert guidance, you can manage your liabilities efficiently. Contact Fraser Bond today to learn more about managing your CGT and maximising your financial gains.