Capital Gains Tax

We often get asked about Capital Gains Tax and if this falls under personal tax allowances. Investments are one way individuals save for retirement or make some additional monthly income whilst doing so.

Capital Gains Tax arises on the sale of an asset (in most cases) and, subject to various reliefs and exemptions, is payable on the difference between the sale proceeds and the original cost.

There are Capital Gains Tax exemptions such as the first £12,300 (2020/21) are tax-free. In general CGT is payable at 10% where total taxable gains and income are less than the Income Tax basis rate banding. CGT is payable at 20% on gains or any parts of gains above this limit.

There are higher rates such as 18% and 28% which apply for chargeable gains on residential property that don’t apply for private residence relief. Some assets are also exempt from CGT, for example, cars, personal goods such as jewellery or antiques sold for less than £6,000 and of course your main residence.

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