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

Personal allowance & Capital Gains Tax allowance

Lukas22
Posts: 2
Joined: Sun Sep 27, 2015 5:57 pm

Personal allowance & Capital Gains Tax allowance

Postby Lukas22 » Sun Sep 27, 2015 7:06 pm

I still cannot find clear answer on the gov.uk site if the Personal allowance and Capital Gains Tax allowance are related. My question is if e.g. my income related to employment is 30,000 p/a and in the same year my Capital gains related to selling shares are 5,000 - should I:

a. Not pay Capital Gains tax as the income related to Capital gains was under Tax-free allowance which is 11,100. My income related to employment does not matter in this case.
b. Pay 28% tax as my overall income is higher that Personal allowance which is 10,600.

Lambs
Posts: 1429
Joined: Wed Aug 06, 2008 3:15 pm

Re: Personal allowance & Capital Gains Tax allowance

Postby Lambs » Sun Sep 27, 2015 9:01 pm

L,

Your CGT Annual Exemption is largely independent of your Personal Allowance. You may, therefore, offset your Annual Exemption against your gain of £5,000 (which will reduce your taxable gain to nil) as a separate exercise to paying Income Tax on your employment income.

It is only AFTER the CGT Annual Exemption that you worry about 'adding' your net taxable gain to your income, in order to determine the rate of CGT to apply.

Hope this helps,

Lambs

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Personal allowance & Capital Gains Tax allowance

Postby King_Maker » Mon Sep 28, 2015 10:14 am

Yes, there are two separate Allowances - one for Income Tax, and one for Capital Gains Tax.

Don't forget that there is a reporting requirement to HMRC even if there is no CGT due, if the disposal PROCEEDS are more than 4x the AEA (Annual Exempt Amount) i.e. £44,000 for 2014-15.

Lukas22
Posts: 2
Joined: Sun Sep 27, 2015 5:57 pm

Re: Personal allowance & Capital Gains Tax allowance

Postby Lukas22 » Mon Sep 28, 2015 5:28 pm

Thank you for clarification.


Return to “Capital Gains Tax, CGT”

cron