Capital Gains Tax Limit

Whenever you dispose, sell or just give away a capital asset, you may be liable to pay Capital Gains Tax on any increase in worth that it has benefited from since you first acquired it.  This can exert quite a burden on your finances, but there is a Capital Gains Tax limit that you can take advantage of to help reduce the strain.

The Capital Gains Tax limit works as follows:

  • The first £9,200 of capital gains each financial year falls under the Annual Exempt Amount (AEA).
  • This limit exempts these gains from Capital Gains Tax.
  • Gains over the AEA limit are added to your annual taxable income and taxed as if the top portion of the resulting sum.

Thus if you can keep your capital gains at a rate of £9,200 or less each year,  then you will be free from the tax.  Since both you and any spouse or partner each have your own AEA, joint ownership of assets allows the capital gains to be split between you and both of your AEAs to be used to the fullest extent.  There are also many special exemptions that can help to reduce the taxable value of your capital gains and keep the total under the yearly Capital Gains Tax limit.

Our Fair Investment Tax Bookshop provides a selection of guides and software to help you make sense of the Capital Gains Tax limit.

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.