Help with CGT example.

empfun

Hi folks!

Needing some help to understand Example B tax from
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4016313

"As a result the first £3,525 of the gains is taxed at 20 per cent, while the remaining £6,475 is taxed at 40 per cent because it falls above the basic rate limit for Income Tax."

My question is where is the £3,525 derived? Thank you.

silvercar

The first £3,525 falls within the basic rate band ie it is below the level at which higher rate tax would be payable.

empfun

Aren't the bands as published at the link.


CGT rates

How much CGT you pay depends on your overall income. Your total taxable gains are added to your taxable income for the year and treated as the top part of that total. The gains are then charged to CGT at the following rates (2007-2008 tax year):

* 10 per cent where they fall below the starting rate limit for Income Tax (£2,230)
* 20 per cent where they fall between the starting rate and basic rate limits for Income Tax (£2,231 to £34,600)
* 40 per cent where they fall above the basic rate limit for Income Tax (£34,601 and above)


I don't see £33,300. Sorry if I don't get it. But could someone show me where £33,300 comes from too? Thanks!

empfun

Cheers! Yeah, I thought something was amiss somewhere.