Capital Gains Tax calculations can be complex due to the many special exemptions and conditions that surround the taxation of gains on capital assets. The heart of the tax calculations is relatively simple:
- The first £9,200 of capital gains each year is exempt from taxation.
- Gains in excess of this value are added to your taxable income.
- The gains are then taxed as the top portion of that income, so at a rate of 10%, 20% or 40% depending on your income.
However, other factors to consider in Capital Gains Tax calculations may include:
- Taper relief, which reduces the payable tax on assets depending on how long you have owned them.
- Exemptions for certain assets such as your primary residence, your car, and chattels of less than 50 years in predictable life or of £6,000 and less in value.
- LIFO (Last In First Out) and 30-day rules on shares.
- Capital losses can be used to lower taxable capital gains, including losses from a previous year.
For more information and advice on Capital Gains Tax calculations, take a look at the links provided below, or check out the guides and software in stock at our Fair Investment Tax Bookshop.