The Capital Gains Tax rate is based on the tax rate levied on your income. Capital Gains Tax is charged on any gains made through the disposal of capital assets that have increased in value since you first acquired them, with the total taxable gains being handled as follows:
- The first £9,200 of taxable gains falls in the annual exempt amount, and is untaxed.
- Gains exceeding this band are added to your taxable income for the year, and are taxed as if the top slice of that sum – thus subject to a Capital Gains Tax rate of 10%, 20% or 40% depending on your income.
- Taper relief causes a reduction in the Capital Gains Tax rate based on the period of time that has passed between acquisition of the asset and disposal of it. In the case of business assets, the rate is cut by 75% after two years, while for non-business asset the rate is cut by 40% over 10 years.
There are also numerous exemptions and conditions that can affect how much Capital Gains Tax you are liable to pay.
Check out our online Fair Investment Tax Bookshop for more helpful guides and software about the Capital Gains Tax rate.