capital gains allowance and income tax allowance

[jamesRS6]

Hi chaps

Just got a couple of questions regarding capital gains and income tax allowance if someone can clear it up , been googling it but Ive been left scratching my head a little. Im self employed, I just do the self assessment form so need to know what Im doing for future reference.

Do you get the 12k capital gains allowance on top of the 12.5k income tax allowance?

Also if you make a capital loss can this be deducted from your total income?


cheers

James

[Testaburger]

jamesRS6 said:

Hi chaps

Just got a couple of questions regarding capital gains and income tax allowance if someone can clear it up , been googling it but Ive been left scratching my head a little. Im self employed, I just do the self assessment form so need to know what Im doing for future reference.

Do you get the 12k capital gains allowance on top of the 12.5k income tax allowance?

Also if you make a capital loss can this be deducted from your total income?


cheers

James

1 - yes. The CGT rate, however, depends on your marginal income tax rate.

2 - no, capital losses can’t be offset against income tax, but can be offset against CGT (and unused CG losses from previous years can be carried forward to do this, too).

[rfisher]

To work out the amount of CGT due on a gain do you calculate the 18% proportion on your first £50,000 income and the 28% proportion on the rest of your income?

Presumably you have to add the gain to your taxable income for that tax year as well?

[Eric Mc]

What part of the gain stands to be taxed at 18% depends on how much of your basic rate INCOME tax band has been used up by other types of income.

Note the 18% and 28% rates of Capital Gains Tax only applies to gains on residential properties. There are different rates for other types of Capital Gains.

[rfisher]

Thanks Eric.

Your expertise is always appreciated.

All the best

[jamesRS6]

Testaburger said:

Great thankyou