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Posted Thu, 25 Jan 2024 11:43:38 GMT by
I am completing a Capital Gains Tax on UK Property Return for 2023/4, and have a question about applying the Personal Allowance. (page 8, 5th question down). Does this mean the Annual Exempt amount of 6k, or the Personal Allowance of 12570 used against income? The confusing part is also that it says 'You cannot deduct your Personal Allowance from your gain' - which if it relates to the exempt amount, then surely you can deduct it? And if it relates to the Income allowance, how can you apply it, if not by deducting it? Very confused.
Posted Mon, 29 Jan 2024 13:24:04 GMT by HMRC Admin 32

In order to determine whether the lower rate of capital gains tax of 18% can be applied, your income tax liability needs to be calculated first.

The question is asking for your personal tax allowance (23/24 = £12570) that is set against your income, so that the rates of income tax can be applied once your personal allowance is deducted.  

If any of the basic rate band of tax is unused, this unused amount, can be applied to the lower rate of Capital Gains Tax, with any remaining gain, taxed at the higher rate of 28%. If all of the basic rate is utilised by your income, then there is no lower rate of Capital Gains Tax availble, then the higher rate of 28% is used.

Thank you.

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