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A capital gain is a profit that you make when you sell an asset. An asset could be anything from a property to shares in a company, to a cryptocurrency, to a piece of art, to a vintage car – and more.
Essentially, a capital gain is the difference between the price you buy your asset for and the price you sell for. When you make a profit on an asset, you may have to pay tax on it.
How much is Capital Gains Tax?
There is a tax-free Capital Gains Tax allowance of £3,000. This means that you don’t have to pay tax on the first £3,000 of profit that you earn. Anything that exceeds this limit is subject to tax at these below rates:
| Type of asset | Basic rate | Higher rate |
| Shares | 10% | 20% |
| Residential property | 18% | 28% |
| Cryptocurrency | 10% | 20% |
| Other | 10% | 20% |
However, there are other exemptions that you need to be aware of. For example, when you sell your private residence (i.e the home you live in), this isn’t subject to Capital Gains Tax.
Frequently Asked Questions
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How do I know how much I should be paying?
When you first start your business, there’s a lot to navigate with your accounts, so let our team help you get set up! Our experts are well versed in Balancing Payments and accounting, so contact us today.
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Can you help me to maintain my own accounting records?
Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple! Contact our team for more advice today!
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