Capital Gains Tax Allowance

Capital Gains Tax (CGT) is the tax you pay when you sell an asset (a property, shares, Bitcoin, personal possessions etc.) for a profit. Any profit you make is known as a capital gain.

There is a tax free allowance for Capital Gains – in the 2023/2024 tax year this is £6000. Anything you earn beyond this point is subject to tax.

Here’s the rate that you’re charged for various investments:

Type of asset Basic rate Higher rate
Shares 10% 20%
Residential property 18% 28%
Bitcoin/cryptocurrency 10% 20%
Other 10% 20%

How much can I make before owing CGT?

You only pay CGT on your profits that are above the Capital Gains Tax allowance. In the 2023/24 tax year, this Capital Gains Tax allowance is £6,000. This is down from £12,300 in the 2022/23 tax year.

Now, if you make less than £6,000 profit in a tax year, it’s tax-free – but be aware that this is £6,000 across all your profits, not per gain.

Capital Gains Tax is calculated separately from your general earnings and is taxed differently – you pay Income Tax on your self-employment and rental incomes, and CGT for things such as selling a family heirloom, or if you are a landlord that sells a buy-to-let property.

If you are an individual taxpayer and you make a capital gain above the CGT threshold, you will need to file a self-assessment tax return to declare the profit and pay the relevant tax on it.

If you own the assets (that you just sold) together with another person, you can use both of your allowances together. This means that the collective allowance is £12,000.

If you don’t use your CGT allowance in a given tax year, you can’t carry it forward to the next year.

The CGT allowance is not related to your Personal Allowance – the Personal Allowance is only for other kinds of earnings (salary, self-employment income, rental income, etc.)

Frequently Asked Questions

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