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Today is the day. Find out what you need to do when your profit is less than the CGT allowance of £6,000 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?
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 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
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 £6,000. Even the painting you wouldn’t pay that much money for… (oops we hope Auntie Julie’s not reading this) 🤫
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:
In the 2022/2023 tax year, the allowance was £12,300. Now, in the 2023/2024 tax year, it’s £6,000. 📉 (internally crying)
But, wipe away those tears, because the allowance resets every tax year – so, it’s not all bad news. 😬
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!
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.
First, you’ll need to figure out the total of your taxable gains. You can do this in 3 steps:
After following these three steps, report your gains in your Self Assessment. With our help, it should be a breeze!
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.
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:
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.
You can file your Self Assessment:
🚨A few dates to add to your calendar – you can thank us later 🤭:
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