If you sell or dispose of something, an asset of yours, and you gain profit on it from when you originally bought it, it will be taxed and this tax is known as capital gain tax. Some of the assets that you might have would be classed under tax free assets so you don’t have to pay capital gain if all of your gains are under your tax-free allowance in a year. When disposing an asset, this could mean that you will be selling the assets or swapping it with someone for something else. Disposing could mean giving it away as a gift or just transferring it to someone.
What you don’t pay Capital Gain Tax on is ISA’s or PEPs, the lottery/betting or pool winnings and you don’t pay it on the UK government gilts and Premium Bonds either.
What you do pay Capital Gains Tax is the shares that you have that aren’t in a PEP or an ISA, any business assets. You do pay it if the property you have which isn’t your main home where you stay, most personal possessions worth £6,000 or more will get the Capital Gain Tax apart from your car. These are known as chargeable assets. Depending on the asset you may claim a relief and getting your tax reduce that you pay. If you dispose any asset that you jointly own with someone then you will have to pay Capital Gains Tax on your share of the gain.
The UK capital gain tax rates are if you pay a higher rate of income tax then you would pay 28% on your gains from your residential property and then you would pay 20% on your gains from other chargeable assets. If you pay the basic rate of income tax then it depends on what size of your gain that you would have to be taxed at.
You would need to:
- Work out how much taxable income you have. This would be your income minus your personal allowance and any other income tax reliefs that you are entitled to
- Work out your total taxable gains
- Deduct your tax-free allowance from your taxable gains
- Add this amount to your taxable income
- If this amount is within the basic income tax band then you will pay 10% on your gains. Or 18% if it your residential property. If it is above the tax band then you will have to pay 20% capital gain tax and 28% on your residential property
Capital Gains Tax rates
The Capital Gain Tax rate for 2016/17 was that allowance for the individuals/personal representatives and trustees for disables people was £11,100 and for other trusts is £5,550 The Capital Gain Tax rate was 20% Capital Gain Tax and 28% on the residential property.
The Capital Gain Tax rate for 2017/18 was that allowance for the individuals/personal representatives and trustees for disables people was £11,300 and for other trusts is £5,650 The Capital Gain Tax rate was 20% Capital Gain Tax and 28% on the residential property.
