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What if my profit is less than the CGT allowance?

  • 4 min read
  • Last updated 27 Mar 2024

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 are some of the most common examples:

You have disposed of an asset if you’ve:

  • Sold it
  • Given it away as a gift
  • Swapped it for something else
  • Had compensation for it

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. 😏

Your situation

Outlined number oneImage of an arrow
How did you make money?
Profit from capital gains
Annual salary
Other income

Tax and profit

Outlined number two
  • Your profit from
    £3,000 tax-free CGT allowance
  • Capital Gains Tax to pay
  • Profit after tax

How your capital gains tax is calculated

The total capital gains tax (CGT) you owe depends on two things:

  • How much you earn in total
  • What type of assets you sell

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 your capital gains from shares were £20,000 and your total annual earnings were £69,000:

Capital gains tax (CGT) breakdown

You pay no CGT on the first £3,000 that you make

You pay £127 at 10% tax rate for the next £1,270 of your capital gains

You pay £3,146 at 20% tax rate on the remaining £15,730 of your capital gains

Tax bill amount £3,273
I want to pay by
Savings frequency

You need to save

£4.91 per day

to pay your £3,273.00 tax bill by 31/1/2026 which is in 666 days

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: 

You only pay Capital Gains Tax on:

  • Personal possessions worth £3,000 or more
  • Property that’s not your main home 🏘️
  • Your main house if you’ve let it out, used it for business, or it’s very large
  • Any shares that are not in an ISA or PEP 🏦
  • Business assets

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. 🎟️

This includes:

  • Selling your tokens
  • Exchanging your tokens for a different type of crypto asset
  • Using your tokens to pay for goods or services
  • Giving away your tokens to another person (unless it’s a gift to your spouse or civil partner)

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?

You can file your Self Assessment:

  • Yourself, either online or by post 📮
  • Use an accountant 
  • Use a tax return service – we’ve heard that TaxScouts is meant to be pretty good 😉

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 
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