Sole trader Capital Gains Tax after pension contributions

I bought a house in 2012. I moved out after a year and rented it out since then until March this year when I sold the property. After all costs and reliefs etc were claimed for, the taxable gain on the property ended up being around £30,000. Having read on the forums about people using pension contributions to lower their income to fall below certain thresholds i.e. child benefit. I thought I would be able to do this to lower my income in order to pay most of this £30,000 gain in the 18% capital gains tax bracket and rather than the 28% bracket. This I thought was on top of getting the income tax relief and reduced student loan payments due to the lower income, so i thought it would be a very good idea, so I put £20000 of the house sale proceeds into a SIPP. After speaking to a friend about this though he said because I am a sole trader I am not able to deduct my pension from my income before tax, he said you can only do that through salary sacrifice from an employer and that I can only get income tax relief on the pension contributions but will not lower my income for capital gains purposes. My profit for the tax year as a sole trader was £39,000. Will my £20,000 pension contribution make my income for the tax year be 19,000 for CGT purposes? (The figures are rounded to make it easier). When filling out the capital gains form to figure out what I owe, do i put my profit figure before any SIPP pension contributions or do I put down my profit minus my pension contributions?

Hi,

There is a capital gains calculator to help you work out your gain here:

Tax when you sell your home

You declare your taxable profits. In your Self Assessment tax return, you would declare your pension payments. This will extend the basic rate band and should reduce the Capital Gains Tax payable.

Thank you.

Hi, Thanks for replying. So I have done that calculator and after reliefs etc it has worked out my Taxable gain at £29,120. The part where I am not sure is, that it asks me: "What was your income for the 2023 to 2024 tax year?" my income was £29,806 I paid £20,000 into a SIPP which they provide "relief at source" for. Does that make it any different? So the pension provider then topped it up to £25,000 total pension contributions for the tax year. So I'm wondering in this situation what should i be putting in for the answer to "What was your income for the 2023 to 2024 tax year?" should it be £29,806 or should I be deducting the £25,000 pension contribution from that? When I put in £29,806 it says gives the below capital gains tax calculation: £20,464 taxable gain multiplied by 18% tax rate £3,683.52 £8,656 taxable gain multiplied by 28% tax rate £2,423.68 Tax to pay £6,107.20 Thanks again

Hi Bryan Mclaughlin

Your income was £29806.  Your personal allowance is applied against this sum, with the remainder taxed at 20%.  
Any amount of the basic rate band unused, is then applied against the lower rate of capital gains tax, with any remainder taxed at the upper rate of capital gains tax.

Thank you.