Capital Gains Tax Calculation

Capital Gains Tax calculation can be complex, due to the many exemptions that you could possibly benefit from to help reduce the tax burden.  It is important to be properly informed about Capital Gains Tax so that you can most effectively mitigate, or even completely avoid, its effects on your finances.

Capital Gains Tax calculation works as follows:

  • For every capital asset that has been disposed of, the increase in value since it was first acquired is calculated.
  • Note that disposal includes giving the asset away as well as selling or exchanging it.
  • The first £9,200 of capital gains each year is exempt from the tax.
  • Gains in excess of this value are added to your taxable income and taxed as if they were the top slice of the total taxable income sum.

While this may look simple, many assets are subject to special conditions that can affect and reduce the tax on them, for instance:

  • Chattels of £6,000 or less in value, and those with a predictable life of 50 years or less, are exempt.
  • Your main residence may be exempt, if it qualifies under certain conditions.
  • Your car is exempt.
  • Taper relief reduces the payable tax on capital assets depending on how long you have possessed them before disposal.

More information and advice on Capital Gains Tax calculation can be found by checking out the links below and having a look at the contents of our Fair Investment Tax Bookshop, stocked with handy guides and help.

Disclaimer: Every effort is made to keep the site accurate, however please bear in mind that tax rates are subject to change. If you require tax advice you should speak to a professional tax adviser.