What if my profit is less than the CGT allowance?

Today is the day. Find out what you need to do when your profit is less than the CGT allowance for the 2024/25 tax year of £3,000 and say farewell to your fear of Capital Gains Tax! 💪

Well, kind of… 

Whilst we can’t stop your capital gains from being taxed, we can make it a whole lot easier for you to understand your profits, allowance, and taxes – not all heroes wear capes, right? 🫣

What is Capital Gains Tax?

Put simply, it’s the tax you pay on your profits (gains). You gain when you sell or ‘dispose of’ an asset. 🗑

Here’s the important distinction. The profit you make is taxed, not the amount of money you receive. Not as bad as you first thought? 📈

For example, if you bought a house for £70,000 (wink wink Gen Z grandparents) and sold it for £300,000, then you’ve made a profit of £230,000. 👵🏼

So, you’re taxed on the profit, £230,000, you made only (sighs).

But, don’t be too disheartened, because you’re entitled to the Capital Gains Tax Allowance! 

Plus, you only have to pay Capital Gains Tax if it’s a house you don’t live in. 😏

Here’s another example. You’ll have to pay Capital Gains Tax on any of the antiques Auntie Julie gave you that you’ve sold for over £3,000. Even the painting you wouldn’t pay that much money for… (oops we hope Auntie Julie’s not reading this) 🤫

What is the Capital Gains Tax Allowance? 

The Capital Gains Tax Allowance is the maximum amount of profit you can earn tax-free – woohoo! 🤩

If you’re already familiar with the Capital Gains Tax Allowance, then here’s something you may not have known: 

The allowance in the 2024/2025 is £3,000.

But, wipe away those tears, because the allowance resets every tax year – so, it’s not all bad news. 😬

When do I have to pay it?

Before you sift through your jewellery box, there’s a few things you should know: 

We’re sure many of you property owners are bursting with questions, such as do I need to pay capital gains if I gift a property? Or can I avoid paying tax on capital gains by flipping houses? Well, we’ve got the answers to these questions and more in our website resources section!

What about crypto assets?

You’ll have to pay tax depending on how your Crypto tokens are used. 🎟️

You can work out how much you’d need to pay here. 

How do I report my gains?

First, you’ll need to figure out the total of your taxable gains. You can do this in 3 steps:

1. 💸 Work out the gain for each asset
2. ➕ Combine the gains from each asset
3. ➖ Deduct any allowable losses 

After following these three steps, report your gains in your Self Assessment.  With our help, it should be a breeze! 

What if my gains are less than the allowance?

You don’t have to pay tax if your total gains are under your Capital Gains Tax allowance – hooray! 

But, you aren’t off the hook that easily…🏃

You still need to report your gains if you’re registered for Self Assessment. 

But, I’m a non-resident

Non-residents don’t pay tax on gains, with the exception of UK land and property 🌍

You’re usually classed as a non-resident if you: 

• 🧳 Spent fewer than 46 days in the UK (or 46 if you haven’t been classed as a UK resident for 3 years)
• ✈️ Work full-time abroad (35 hours a week)

If you want to learn more about this, we’ve got a detailed guide here!

If you sell property or land, including any below the tax-free allowance, you’ll need to inform HMRC – surprise! 

You may also be required to report the disposal to HMRC within 60 days. 📆

But, if you’re unsure, you can use the Self Assessment helpsheet to see when, and how much tax you’ll pay. 

How do I file my Self Assessment?

And finally…

🚨A few dates to add to your calendar – you can thank us later 🤭:

• 6th – 5th April – tax year 
• 5th October – deadline to register for Self Assessment 
• 31st October – deadline to submit a paper tax return
• 31st January – deadline to submit an online tax return
• 31st January – payment deadline