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    • Mortgage Repayment
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  • Capital Gains Tax

Capital Gains Tax

TAX TREATMENT VARIES ACCORDING TO INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE ADVICE ON ESTATE PLANNING AND TAX PLANNING.

Capital Gains Tax Allowances, Liabilities & Reliefs

In the tax year 2020/2021, an individual's CGT allowance is £12,300 (2019/20 - £12,000).

This means you do not have to pay tax on gains from buying and selling shares or other investments during the tax year up to that amount. You do not normally have to pay tax on any gain you make when you sell your main residence.

  2020/2021 2019/2020
For standard rate taxpayers(1) 10% 10%
For trustees and higher/additional rate taxpayers(1) 20% 20%
Annual exempt amount - individuals £12,300 £12,000
Annual exempt amount - trusts £6,150 £6,000
Entrepreneurs' relief lifetime limit £1,000,000 £10,000,000
Entrepreneurs' rate 10% 10%

(1). These rates do not apply to transactions involving residential property (the sale of second homes) or carried interest (the share of profits or gains that is paid to asset managers). CGT rates for these transactions remain at 18% (standard rate taxpayers) and 28% (higher rate taxpayers).

If you have used your CGT allowance, don't forget your Individual Savings Account (ISA) allowance. Both a 'Cash ISA' and a 'Stocks and Shares ISA' can shelter capital gains on investments, for example unit trust holdings, worth up to £20,000 per year.

From 6th April 2008 Taper Relief was removed and a new relief called 'Entrepreneurs' relief' was introduced to reduce the Capital Gains Liabilities on the disposal of certain business assets.

CGT is a tax on capital 'gains'. If when you sell or give away an asset it has increased in value, you may be taxed on the 'gain' (profit). This doesn't apply when you sell personal belongings worth £6,000 or less or, in most cases, your main home.

When do I have to pay CGT?

You may have to pay CGT if, for example, you:

  • sell, give away, exchange or otherwise dispose of (cease to own) an asset or part of an asset
  • receive money from an asset - for example compensation for a damaged asset

You don't have to pay CGT on:

  • your car
  • your main home - provided certain conditions are met
  • ISAs
  • UK Government gilts (bonds)
  • personal belongings individually worth £6,000 or less when you sell them
  • betting, lottery or pools winnings
  • money which forms part of your income for income tax purposes

Important Considerations:

  • if you are married or in a civil partnership and living together you can transfer assets to your husband, wife or civil partner without having to pay CGT
  • you may not give assets to your children or others or sell assets to them cheaply without having to consider CGT
  • if you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT
  • if someone dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time - however if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal

For further information about the 2020 Budget changes please click here.

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Company address: Bingham-Woods Independent Financial Advisors Ltd, 2 Bridge Street, Spalding, Lincolnshire, PE11 1XA
T: 01775 718257 Email: [email protected]

Bingham-Woods Independent Financial Advisors Ltd is an appointed representative of Quilter Wealth Limited, and Quilter Mortgage Planning Limited which are authorised and regulated by the Financial Conduct Authority. Quilter Wealth Limited is entered on the FCA Register (https://register.fca.org.uk/s/) under reference 217742 and Quilter Mortgage Planning Limited under reference 440718.

Bingham-Woods Independent Financial Advisors Ltd (05994922) is registered in England. The registered address is 2 Bridge Street, Spalding, Lincolnshire PE11 1XA.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.

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