Capital gains tax is paid on the profit you make when you sell an asset that has increased in value. From 6 April 2018, the amount of profit individuals can earn tax free will increase from £11,300 to £11,700.
Married couples and civil partners can use both partners’ annual exempt amounts, raising their total to a combined £23,400.
Assets held in trust will also rise from £5,650 to £5,850 of tax free profits.
For more information on capital gains tax rates and allowances, please visit: https://www.gov.uk/government/publications/autumn-budget-2017-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances
The capital gains tax allowance in 2021-22 is £12,300, the same as it was in 2020-21. This is the amount of profit you can make from an asset this tax year before any tax is payable. If your assets are owned jointly with another person, you can use both of your allowances, which can effectively double the amount you can make before CGT is due. If you are married or in a civil partnership, you are free to transfer assets to each other without any CGT being charged.
Example
Your taxable income (your income minus your Personal Allowance and any Income Tax reliefs) is £20,000 and your taxable gains are £12,600. Your gains are not from residential property.
First, deduct the Cap Gains tax-free allowance from your taxable gain. For the 2020 to 2021 tax year the allowance is £12,300, which leaves £300 to pay tax on.
Add this to your taxable income. Because the combined amount of £20,300 is less than £37,500 (the basic rate band for the 2020 to 2021 tax year), you pay Capital Gains Tax at 10%.
This means you’ll pay £30 in Capital Gains Tax.
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