In the UK, citizens are taxed both on the income they earn and on the profit they make from the sale of assets like shares (not those contained in a PEP or an ISA), businesses, personal possessions, and homes (except your primary residence). 

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What is capital gains tax? 

U.K. capital gains tax is payable on the profits you make from the sale of assets.

However, what is profit? On some items like shares or the sale of a business, the profit calculation is relatively straightforward. However, on assets which you may have owned for years and on assets you’ve spent money on improving or restoring, working out your actual level of capital gain is much more complicated.

Please note that incorporated businesses do not pay capital gains tax – they pay corporation tax on the profit made on the sale of an asset. Sole traders and partnerships do pay corporation tax

In the last 20 years, Black and White Accounting have advised our clients on capital gains tax and how to legitimately reduce the amount of capital gains tax that is payable following the disposal of an asset. 
To find out more, please use the form below, call us free on 0800 140 4644, or email [email protected].

Capital gains tax allowance

There is an annual capital gains tax allowance. Like with self-assessments, the capital gains tax allowance applies to the personal tax year – 6th April to the 5th April the following year. 

In the current tax year, you do not have to pay capital gains tax on all of your combined capital gains of £12,000 – this is the “Annual Exempt Amount”.

If your gains do surpass £12,000, you only pay capital gains tax on the total amount above that figure. For example, if your annual capital gains total £20,000, you will only pay capital gains tax on £8,000, the difference between these two figures (£20,000 minus £12,000 allowance).

If you represent a trust, the maximum annual exempt amount is £6,000 in a tax year.

Understanding the annual capital gains tax allowance and its implications is crucial for effective financial planning, especially for individuals navigating the complexities of self-assessment accountant responsibilities.

Capital gains tax rate

The rate for capital gains tax in the UK varies according to whether you pay basic rate income tax or higher/additional rate income tax.

If you are a basic rate taxpayer, you pay 10% on your capital gains over your annual exempt amount. If, however, your capital gains means that your total income will now be higher than either the higher rate or the additional rate threshold, you pay 20% capital gains tax on the amount above that limit.

Please consult with a Black and White Accounting partner on the exact amount payable if your overall capital gains pushes you into a higher income tax bracket in a financial year.

Capital gains tax for property

If you are a landlord, different rates apply for the disposal of property which is not your primary residence.

If you are a basic rate taxpayer, the capital gains tax due would be 18% on the profit realised from your sale. For higher rate and additional rate taxpayers, the amount due is 28%.

Calculating the exact rate of capital gains tax that a landlord should pay on disposal of their non-primary property is difficult, particularly if, at any point, the property you’re disposing of has either:

• been or currently is your primary residence and you have let this out in the past to tenants

• primarily been used to let out to tenants but it has, at times, been used as your primary residence

Please contact us for more information.

Capital gains tax Entrepreneurs’ Allowance

The rate for capital gains tax in the UK is currently charged at 10% of the price you sell some or all of your shares in a business for minus allowable expenses (like professional services fees).

Again, the rules surrounding qualification and calculation of the tax itself are complicated and we invite you to contact us for more information relevant to your situation.

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Capital gains tax general exemptions

Capital gains tax is not normally payable on the following:

• The sale of your primary residence
• Betting wins
• Business possessions and non-wasting assets where the price sold at is less than £6,000
• Certain life assurance policies
• Certain types of company takeovers and reorganisations
• Classic cars
• Gifts to charities and amateur sports clubs
• Lottery wins
• Non-qualifying mis-sold pension compensation payments
• Possessions whose value decrease
• Premium bonds
• Primary residence sales which qualify for CGT (for example, if you have used part of or let part of your property to businesses)
• Private cards
• Savings certificates
• SAYE contracts
• Spouse/civil partnership transfers

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Capital Gains Tax in Hampshire and Surrey

Capital gains tax – how much will you have to pay? Get professional advice – although capital gains tax calculators you find online are useful indicators as to the level of capital gains tax you may pay, they are prone to error because of the inability to factor in your ownership costs into a calculator. 

For an accurate assessment of any Capital Gains Tax you may be due to pay, please use the form below, call us free on 0800 140 4644, or email [email protected]. 

Based in Hampshire and Surrey, Black and White Accounting offers a full range of complimentary accounting and business support services to individuals and companies for a fixed monthly fee. We are currently offering a free hour’s consultation with potential clients – we can come to your premises or you’re very welcome to visit ours.