The Capital Gains Tax allowance is the amount of capital gain that is tax-free. In the 2019/2020 tax year, this amount is £12,000 – up from £11,700 in 2018/2019.
You only have to pay Capital Gains Tax (CGT) on the profits that go above this tax-free amount.
A few things to remember about the CGT allowance:
- if you own these assets (that you just sold) together with another person, you can use both of your allowances together
- if you don’t use your CGT allowance in a given tax year, you can’t carry it forward to the next year
- the CGT allowance is not related to your Personal Allowance. The Personal Allowance is only for other kinds of earnings (salary, self-employment income, rental income, etc.).