CGT annual exempt amount - separate to income tax allowance?

pinkteapot

I'm a basic rate taxpayer (salary £30k, 944L tax code, paying tax on remainder of income and interest at 20%).

I'm planning on selling units in an investment fund. I'll have owned them for about three years and the gain in value over that time will be around £2-3k.

I read on the HMRC site that I have an annual CGT exempt allowance of £10,600, so I didn't think any tax would be owed. Is that correct?

The HMRC site then gave some examples which confused me, as they talked about someone's income and spreading their allowance across it.

I don't currently do self-assessment, so just need to work out if I'll need to declare this sale to HMRC and request a self-assessment form for this tax year.

CLAPTON

the cgt allowance currently 10,900 is completely separate from your tax allowance of 9440

so you can enjoy gains of up to 10,900 with no tax to pay
your income tax rate (20%, 40% 45% ) only comes into the equation once your gains exceed 10,900

if you don't currently self assess and your total SALES don't exceed 43,600 ( 4 x 10,900) then there is no need to SE.

pinkteapot

Perfect - exactly what I needed to know. Thanks.

System

Just remember that the so-called "annual allowance" is nothing of the sort. It is a one-off allowance relating only to the year of sale.

HMRC misuse the word "annual", which properly implies something that recurs each year. So however many years you have held the assets, you only get one "annual" allowance.

Unlike an annual salary, which you receive every year

zygurat789

Clifford_Pope wrote: »

Just remember that the so-called "annual allowance" is nothing of the sort. It is a one-off allowance relating only to the year of sale.

HMRC misuse the word "annual", which properly implies something that recurs each year. So however many years you have held the assets, you only get one "annual" allowance.

Unlike an annual salary, which you receive every year

But it is an annual allowance, it is given each year, it is given against capital gains. To realise a gain you have to make a sale and you can only sell a particular item once.