This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Large CGT with small income

TomGood2
Posts:7
Joined:Wed Dec 27, 2017 11:47 am
Large CGT with small income

Postby TomGood2 » Thu Feb 01, 2018 1:09 pm

Hi folks

I wonder if someone could check my understanding/calculations of CGT where there's a lot of CG and no income besides bank interest. Read the gov.uk site but would feel more comfortable double checking.

Capital Gain is not from property.
These numbers are just examples.

Capital Gain £200,000

CGT tax free allowance 17/18 £11,300
Taxable gain £188,700

17/18 Income Tax Personal allowance £11,500
17/18 Income Tax Basic Rate Threshold £45,000
17/18 Personal Savings Allowance £1,000

17/18 Bank Interest Received £3,000
17/18 Taxable Interest £2,000


CGT rate applicable 10% £43,000 £4,300
CGT rate applicable 20% £157,000 £31,400

CGT Due £35,700


So I'd basically apply 10% CG rate to £43K of CG as my taxable income (with £3K on bank interest) is £2K?
I had originally thought the 10% rate applied only to any unused personal allowance but now I don't think that's right.

Thanks for any help.

TomGood2
Posts:7
Joined:Wed Dec 27, 2017 11:47 am

Re: Large CGT with small income

Postby TomGood2 » Thu Feb 01, 2018 1:10 pm

Didn't format in the way I expected but hopefully makes sense.

TomGood2
Posts:7
Joined:Wed Dec 27, 2017 11:47 am

Re: Large CGT with small income

Postby TomGood2 » Thu Feb 01, 2018 1:23 pm

Perhaps I should further clarify my confusion extends from reading the following from another source:
The rate of Capital Gains Tax is 10%, where the total of taxable gains and taxable income is less than £33,500. Any excess gains are taxed at 20%.
Does this mean that though I'm only using £2K of my personal allowance (£3K bank interest - £1K personal savings allowance) I don't use any of the remaining personal allowance for the 10% CG band? i.e. £33.5K at 10% and the rest at 20%? So it's unused?

Or do I in effect start the calculation using -£9.5K of taxable income hence resulting in £43K (£11.5K - £2K + £33.5K) at 10%?

Sorry if I'm talking nonsense :)

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Large CGT with small income

Postby AGoodman » Fri Feb 02, 2018 2:53 pm

Note quite. The real basic rate threshold is £33,500 as you cannot set your income tax personal allowance against gains.

The personal allowance would absorb the interest so that can be ignored.

I believe the CGT is:
0% on £11,300
10% on £33,500
20% on balance

= £34,390

TomGood2
Posts:7
Joined:Wed Dec 27, 2017 11:47 am

Re: Large CGT with small income

Postby TomGood2 » Fri Feb 02, 2018 5:22 pm

OK great - thanks for the response.

MickyV
Posts:16
Joined:Fri Jul 10, 2015 8:04 am

Re: Large CGT with small income

Postby MickyV » Sat Feb 03, 2018 1:02 pm

Note quite. The real basic rate threshold is £33,500 as you cannot set your income tax personal allowance against gains.

The personal allowance would absorb the interest so that can be ignored.

I believe the CGT is:
0% on £11,300
10% on £33,500
20% on balance

= £34,390
Sorry - trying to get my understanding of the tax better:

As TomGood2 also has bank savings earnings of £2,000 more than the £1,000 allowance, will that not count towards his basic rate threshold?
If so, would the CGT not be:

0% on £11,300
10% on £31,500
20% on balance

= £34,590 ?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Large CGT with small income

Postby bd6759 » Sat Feb 03, 2018 1:25 pm

No.

The taxable interst is nil because of his person allowance. He needs to earn more than the personal allowance before he starts to use up the BR band.

MickyV
Posts:16
Joined:Fri Jul 10, 2015 8:04 am

Re: Large CGT with small income

Postby MickyV » Sat Feb 03, 2018 1:58 pm

Got it.

Thank you

venture53
Posts:14
Joined:Thu Jun 16, 2011 12:56 pm

Re: Large CGT with small income

Postby venture53 » Fri Feb 23, 2018 12:51 pm

correct me if I am wrong but I thought that CGT rates on properties are 18% and 28 % and not 10 & 20% as used in the calculations above

venture53
Posts:14
Joined:Thu Jun 16, 2011 12:56 pm

Re: Large CGT with small income

Postby venture53 » Fri Feb 23, 2018 12:52 pm

Oops. Just saw the clarification that gains are from non property transaction. So 10 & 20% applies


Return to “Capital Gains Tax, CGT”