GCT - At what stage in my tax calculation?

This is a question relating to the layering of my tax calculation. If I understand this correctly my tax calculation for the year is worked out in this order: Employment Pension Self-employment Property (We have several buy-to-lets) Interest from savings Dividends from shares We are selling one of our buy-to-lets this year and will be liable for CGT Is this calculated after the above or does it fall before before interest from savings and dividends from shares? The reason I ask is because before CGT my projected profit/earnings will fall just below the higher rate tax band Thanks Bruno

Hi,

You are correct.  Legislation demands that Income Tax is calculated in the same set sequence every time. For the tax year 2023 to 2024, your income from employment, self employment and property will be added together and personal allowances applied to the total and the basic rate band applied, followed by the higher rate band and then the additional rate band.  

Bank and building society interest is next to be applied, with the first £1000 free of tax for basic rate taxpayers and £500 for higher rate taxpayers. Dividends are next to be taxed on dividends received above the dividend allowance of £2000, taxed ar 8.75% if there is unused basic rate band and 33.75% followed by 39.35%.  

Once Income Tax is calculated, Capital Gains Tax is calculated. If there is any of the basic rate band not used against your income, this balance can be applied against the lower rate of capital gains, 18% for residential property and 10% for other gains, and remaining gains are taxed at 24% for residential property and 20% for other gains.

Thank you.