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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. 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% |
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.
The allowance for 2023/2024 is £6000. Anything you earn beyond this will be liable for tax.
There’s a lot to navigate with your accounts, so let our team help you get set up! Our experts are well versed in Capital Gains Tax and accounting, so contact us today.