Capital gains tax rules

Elderflower

Due to the sale of a house jointly owned by myself and 2 brothers and occupied by our mother until her death last yr, I have made a capital gain which is taxable. However, I am retired and my personal income is less than £6k, well under the personal tax allowance of £9440. Adding my cap gain to my income still leaves me about £2k short of the annual income tax allowance. Will I still have to pay cgt?

zygurat789

Is your capital gain c£1,500 or c£12,500?

purdyoaten

zygurat789 wrote: »

Is your capital gain c£1,500 or c£12,500?

I suspect that it is the former and the op is unaware that he/she has both a capital gains exemption of £11000 in addition to a personal tax allowance of 10000 (not 9440).

zygurat789

purdyoaten wrote: »

I suspect that it is the former and the op is unaware that he/she has both a capital gains exemption of £11000 in addition to a personal tax allowance of 10000 (not 9440).

That's where I was leading the OP

jorgelopez

And that's how the government makes money out of it's citizens, thru taxes.

Dr_Teeth

jorgelopez wrote: »

And that's how the government makes money out of it's[sic] citizens, thru[sic] taxes.

How else would they raise money?

purdyoaten

Dr_Teeth wrote: »

How else would they raise money?

Ignore - see his other posts - post count manipulation!

Elderflower

zygurat789 wrote: »

Is your capital gain c£1,500 or c£12,500?

Having deducted all allowable expenses, my taxable gain is £2050. The gain was last year so I am using allowance figs for 2013/14

zygurat789

Elderflower wrote: »

Having deducted all allowable expenses, my taxable gain is £2050. The gain was last year so I am using allowance figs for 2013/14

£10,900 so no taxable CG.

Elderflower

Sorry, maybe I didn't make it clear that I have deducted all allowances already. Thanks.

booksurr

Elderflower wrote: »

Sorry, maybe I didn't make it clear that I have deducted all allowances already. Thanks.

CGT and income tax allowances are not connected in terms of how much taxable gain you have or how much you have to pay on either tax except in so far as one informs the other in terms of which tax rate applies. If your taxable gain is more than the CGT allowance then you will pay CGT, irrespective of whether you don't pay income tax. They are separate taxes otherwise everyone would have zero income to avoid income tax at 20/40/45% and pay only CGT because all their "income" was from selling capital assets payable at 18/28%. Some people do of course do just that but it is not for the "normal" person

you have a taxable capital gain of £2,050 in 13/14 after deducting the 11,000 CGT allowance. So your "total income" for the purposes of your CGT tax payable calculation is: income liable to income tax (approx 6,000) less income tax allowance that year (9,440) = zero . Now add on capital gain (net of 11k allowance) = 2,050. This means your "total taxable income" for 13/13 for CGT purposes is 2,050 which is <32,101 (13/14 lower rate band cutoff point) and so is 18% for CGT purposes

CGT payable 2050 x 18% = £369

Income tax payable = zero