Capital Gains and Income tax personal allowance

What are the rules for CGT when you have zero income-taxable income. For example if you cashed in shares and the gain was over the capital gains allowance (£6k) BUT you have no other income, so your income tax personal allowance of £12,570 is unused. Would this make any difference or are they completely separate to each other so do not influence each other.

Hi,
You cannot use your personal allowances against CGT so anything above the £6000 annual allowance (23/24) would remain liable to tax.
You would have the benefit of all the basic rate band so that any gains would be taxed at either 10% or 18% up to £37700 and the higher rates thereafter.
Thank you.

If disposals of shares was £13k (and under 6k gain so no cgt payable) and assuming that there was no other income, does the £13k disposal count towards to personal tax allowance of £12,570?

Or is it just the gain that counts towards the personal tax allowance of £12,570?

Hi keith7819,
No, Personal Allowances cannot be used against Capital Gains Tax.
Thank you. 

Hi,

Income Tax and Capital Gains Tax are two entirely separate taxes, with each having is own tax free element. In 2023 to 2024, Income Tax has a personal allowance of £12570 and Capital Gains Tax has an annual exempt allowance of £6000. The two taxes are always, without exception, calculated separately.  

Income Tax is always, without exception, calculated first. Where there is an element of the basic rate band (20%) not utilised against income, this unused element can then be utilised as the lower rate of capital gains tax (either 10% or 18% depending on the type of gain) with any remaining gain taxed at 20% or 28%.  

Capital Gains Tax for residential property is taxed at the lower rate of 18% and the higher rate of 28%, whereas, personal possessions such as stocks and shares or jewellery, paintings, antiques, coins and stamps and sets of things, eg matching vases or chessmen; are all taxed at the rates of 10% and 20%.  

Tax when you sell property

Capital Gains Tax on personal possessions

Thank you.

Hi I have read through the questions and replies and find them really helpful, thank you. I understand that CGT and Income tax attract entirely separate allowances. My question is once calculated and CGT is paid, is the gain from the sale of a second UK property added to income when calculating the tax bracket that i am in eg 45% bracket rather than 20%, when calculating how much income tax I pay on my income which is my pension ? Thank you

Hi,

Your tax bracket for your pension won't change based on any capital gains due. The pension income only then determines the rate at which your gain is taxed.

Capital Gains Tax: what you pay it on, rates and allowances

Thank you.

Hi all, I understand from the above that any capital gain will not alter the rate at which you pay tax on your usual employment income, is that correct? I will dispose of a property this year and will incur Capital gains at the higher rate. What I am concerned about is whether this then means my tax from my employment will be pushed up to the highest rate of 45% for that year? Can anyone please confirm for clarity? Many thanks

Hi dmoore84,
Yes the rate of tax due on your employment income will not be affected with the gain.
It is the level of the employment and any other income that then dictates the rate of tax for the Capital Gain.
Thank you. 

 

Hi, I am trying to find out which type of Capital Gain (property vs non-property) comes first in the calculation hierarchy. So, for example, if my normal income puts me at £33,000 that means I have £4700 unused Basic rate band. Then, say, I have a property capital gain of £4000 and a non-property CG of £4000 in the same year. Should I put the property CG first so it will be taxed at 18% and then the non-property gain second so it will have £700 taxed at 10% and £3300 at 20%. Or, should the non-property CG be addressed before the property CG. With the rate differential now different for the Basic vs Higher brackets (Basic property is 8% higher whereas Higher Property is only 6% higher) this makes a difference. It is cheaper to put non-property first.

Hi Wee Gee,
As UK property needs to be declared within 60 days, you can specify how much of the annual allowance you wish to use.
You can then report the non property gain and use the annual allowance there or vice versa
Please see here:
Report and pay your Capital Gains Tax
Thank you.