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Your total capital gains tax (CGT) owed depends on two main components:
Your overall earnings determine how much of your capital gains are taxed at 10% or 20%.
Our capital gains tax rates guide explains this in more detail.
In your case where capital gains from shares were £20,000 and your total annual earnings were £69,000:
You pay no CGT on the first £12,300 that you make
You pay £127 at 10% tax rate for the next £1,270 of your capital gains
You pay £1,286 at 20% tax rate on the remaining £6,430 of your capital gains
Capital Gains Tax is a tax you pay on your profits. You declare anything you’ve earned from selling an asset (over a certain threshold) via a tax return. You’ll then need to file and pay your Capital Gains Tax bill by 31st January each tax year.
The rate of CGT that you pay each year depends on the type of asset you’ve sold and how much you earn overall.
Use our Capital Gains Tax calculator to work out what tax you owe on your investment profits. Capital Gains Tax is basically a tax that you’re charged on money you make from selling an asset. When we say asset, this can mean any of the following that generate taxable gains:
As you can see from using the calculator, you pay different rates depending on what you’re selling. Check out the basic Capital Gains Tax formula here 👇
|Type of asset||Basic rate band
(income < £50,270)
|Higher rate band
(income > £50,270)
After selling an asset, you only owe Capital Gains Tax on profits above £12,300. Anything less than that is tax-free. When you earn more than £12,300 during a tax year, this is taxable income which you will need to declare to HMRC and file a tax return. Make sure you do this by 31st January the tax year after you profit.
In practice, here are the deadlines to be aware of:
If you sell a residential property, you now need to declare your profits within 30 days and pay any tax you owe. It’s via a digital service called the Real Time Capital Gains Tax Service. The 30 day rule has been in place since 6th April 2020. If you don’t do this, you could face a fine from HMRC. Be aware that this includes both UK residents and those who own UK property but live abroad. Take a look at the following exceptions to these changes:
Read more about the CGT changes.
No. If you’re selling your main home, you don’t owe CGT. You only pay capital gains tax on property if you’re operating a buy-to-let business or have a second home that you’re selling.
You also don’t need to worry about paying any CGT on your rental income. You’ll owe Income Tax on this and CGT at the point at which you sell up (if you’re not also living in the house). Read more about rental income tax via our guides.
Reducing the CGT you owe may be tricky. There’s no tax credit or tax relief associated with it, however you can claim the Capital Gains Tax allowance to reduce your tax liability. Every tax year, you can earn up to £12,300 tax-free in profit. Anything less than this means you won’t have to file a tax return.
Calculating your tax is one thing, but there’s nothing like speaking to a real, human expert, right? That’s why we offer a pay-as-you-go tax accountant service. Get your tax return filed, a one-off tax advice consultation plus online support from an accredited accountant. Just £229, all in.
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