Capital Gains Tax
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Capital Gains Tax Allowances, Liabilities & Reliefs
In the tax year 2020/2021, an individual’s CGT allowance is £12,300 (2019/20 – £12,000).
This means you do not have to pay tax on gains from buying and selling shares or other investments during the tax year up to that amount. You do not normally have to pay tax on any gain you make when you sell your main residence.
|For standard rate taxpayers(1)||10%||10%|
|For trustees and higher/additional rate taxpayers(1)||20%||20%|
|Annual exempt amount – individuals||£12,300||£12,000|
|Annual exempt amount – trusts||£6,150||£6,000|
|Entrepreneurs’ relief lifetime limit||£1,000,000||£10,000,000|
(1). These rates do not apply to transactions involving residential property (the sale of second homes) or carried interest (the share of profits or gains that is paid to asset managers). CGT rates for these transactions remain at 18% (standard rate taxpayers) and 28% (higher rate taxpayers).
If you have used your CGT allowance, don’t forget your Individual Savings Account (ISA) allowance. Both a ‘Cash ISA’ and a ‘Stocks and Shares ISA’ can shelter capital gains on investments, for example unit trust holdings, worth up to £20,000 per year.
From 6th April 2008 Taper Relief was removed and a new relief called ‘Entrepreneurs’ relief’ was introduced to reduce the Capital Gains Liabilities on the disposal of certain business assets.
CGT is a tax on capital ‘gains’. If when you sell or give away an asset it has increased in value, you may be taxed on the ‘gain’ (profit). This doesn’t apply when you sell personal belongings worth £6,000 or less or, in most cases, your main home.
When do I have to pay CGT?
You may have to pay CGT if, for example, you:
You don’t have to pay CGT on:
For further information about the 2020 Budget changes please click here.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAX PLANNING.
TAX TREATMENT IS BASED ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN THE FUTURE.