Capital Gains Tax
Capital Gains Tax Allowances, Liabilities & Reliefs
In the tax year 2021/2022, an individual's CGT allowance is £12,300 (2020/21 - £12,300).
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.
2021/2022 | 2020/2021 | |
---|---|---|
For standard rate taxpayers(1) | 10% | 10% |
For trustees and higher/additional rate taxpayers(1) | 20% | 20% |
Annual exempt amount - individuals | £12,300 | £12,300 |
Annual exempt amount - trusts | £6,150 | £6,150 |
Entrepreneurs' relief lifetime limit | £1,000,000 | £1,000,000 |
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 2021 Budget changes please click here.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM TAXATION, ARE SUBJECT TO CHANGE.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TAX PLANNING.
TAX TREATMENT IS BASED ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN THE FUTURE.
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Upon reviewing our insurances we realised that we did not have any mortgage protection in place and engaged Alex to look at the options best suiting our particular needs. Alex explained the options with recommendations, and in particular obtained cover that would otherwise have been difficult or too expensive. We are now very confident that we have suitable and adequate protection in place that is not excessive but suits our current and future needs.
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Sam Colyer – Hempstead
I would have no hesitation at all in recommending Phil to provide high quality, detailed and innovative financial planning advice. He has advised me for a number of years now on a wide range of affairs and really invests the time to understand your position and objectives, and works to provide the best solution. Overall, a very impressive service.
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I have been working with Phil now for around 14 years in his field as a Financial Advisor, until then I had only been given ad-hoc advice. It was encouraging finally to find someone with the expert knowledge that Phil has to work with in a proactive and personable relationship. Over the years I have been associated with Phil he has given me invaluable advice and together we are now managing a wide range of my financial requirements, from investments and Pensions through to social impact planning. I am pleased to recommend Phil for these reasons and above all for his integrity and professionalism.
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I first used Phil for a Will – that was in 1988! He has been a trusted and reliable source of knowledge that has since secured my future financial planning. I have a sound investment portfolio that has diversified my risk but also has been an exciting path to follow. Phil has helped me understand what areas I can invest in and taken decisions that I understand. He always speaks in a language I can understand and I feel I have a sound future when it comes to my financial planning.
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Phil gave me excellent advice. He advised me on what plans best suited my circumstances and retirement plans. He explained the schemes in details without any pressure. The old schemes have now been transferred without any problems
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