Capital gains on assets not from property.

PokerPlayer111

If someone has £100k capital gain from an asset (lets assume asset cost nothing) and its not from property + their income earnings are zero for that tax year. You'd deduct capital gains tax free allowance of £11.3k = £88.7k? So you pay 10% capital gains tax for the first £45k and 20% capital gains tax for the £43.7k?

£13.240k captial gains tax due?

[Deleted User]

Sounds good to me!

PokerPlayer111

[Deleted User] wrote:

Sounds good to me!

Ok great. So what if the person earns their personal allowance for their income that same tax year, so they earn 11.5k on top of the £100k asset capital gains (same as above, nothing to do with their general income etc) do they pay the same capital gains? or do you not get a personal allowance in this case?

The person runs a business and can make their earnings for that tax year zero or £11.5k by buying tons of stock you see. What should they do to limit capital gains for that year? "earn" zero or is earning £11.5k considered the same from a capital gains perspective in this case?

HappyHarry

PokerPlayer111 wrote: »

If someone has £100k capital gain from an asset (lets assume asset cost nothing) and its not from property + their income earnings are zero for that tax year. You'd deduct capital gains tax free allowance of £11.3k = £88.7k? So you pay 10% capital gains tax for the first £45k and 20% capital gains tax for the £43.7k?

£13.240k captial gains tax due?

Not quite ...

£11,300 Allowance
£33,500 @ 10% (The basic rate tax band is £33,500 not £45,000)
£55,200 @ 20%

Total is £14,390 tax to pay.

[Deleted User]

PokerPlayer111 wrote: »

Ok great. So what if the person earns their personal allowance for their income that same tax year, so they earn 11.5k on top of the £100k asset capital gains (same as above, nothing to do with their general income etc) do they pay the same capital gains? or do you not get a personal allowance in this case?

They would get their personal allowance which is separate from their capital gains allowance.
With regard to the £100000 see:

https://www.gov.uk/guidance/adjusted-net-income#what-is-adjusted-net-income

The person runs a business and can make their earnings for that tax year zero or £11.5k by buying tons of stock you see. What should they do to limit capital gains for that year? "earn" zero or is earning £11.5k considered the same from a capital gains perspective in this case?

They but 'tons of stock' and reduce their profit accordingly? The stock has no value?
You cant' reduce your profit by buying more stock in that manner.

[Deleted User]

HappyHarry wrote: »

Not quite ...

£11,300 Allowance
£33,500 @ 10% (The basic rate tax band is £33,500 not £45,000)
£55,200 @ 20%

Total is £14,390 tax to pay.

WHOOPS!!! :rotfl:

PokerPlayer111

HappyHarry wrote: »

Not quite ...

£11,300 Allowance
£33,500 @ 10% (The basic rate tax band is £33,500 not £45,000)
£55,200 @ 20%

Total is £14,390 tax to pay.

ok fair enough do you know if anything changes as regards capital gains tax due if there are income earnings of £11.5k that same year?

HappyHarry

PokerPlayer111 wrote: »

Ok great. So what if the person earns their personal allowance for their income that same tax year, so they earn 11.5k on top of the £100k asset capital gains (same as above, nothing to do with their general income etc) do they pay the same capital gains? or do you not get a personal allowance in this case?

The person runs a business and can make their earnings for that tax year zero or £11.5k by buying tons of stock you see. What should they do to limit capital gains for that year? "earn" zero or is earning £11.5k considered the same from a capital gains perspective in this case?

Annual earnings between £0 and £11,500 will not have any effect on the CGT payable.

Earnings have their own allowance of £11,500 per year. The CGT allowance of £11,300 per year is entirely separate.

Once earnings are above £11,500, then CGT is affected, as the amount liable to 10% CGT is reduced, hence the amount liable to 20% CGT is increased.

[Deleted User]

HappyHarry wrote: »

Annual earnings between £0 and £11,500 will not have any effect on the CGT payable.

Earnings have their own allowance of £11,500 per year. The CGT allowance of £11,300 per year is entirely separate.

Once earnings are above £11,500, then CGT is affected, as the amount liable to 10% CGT is reduced, hence the amount liable to 20% CGT is increased.

Thanks for pointing out my silly error. I had answered the personal allowance query in the middle of my last reply but made a mess of the highlighting.. I also suspect that the op was querying as to whether the personal allowance remained intact on £100000 of capital gains.The 'reducing profit by buying additional stock' issue was my main concern

PokerPlayer111

[Deleted User] wrote:

Thanks for pointing out my silly error. I had answered the personal allowance query in the middle of my last reply but made a mess of the highlighting.. I also suspect that the op was querying as to whether the personal allowance remained intact on £100000 of capital gains.The 'reducing profit by buying additional stock' issue was my main concern

Hmmm yeah this is a potential concern. Trying to get head around this. Its a newish business, money has to be speculated into clothing stock which only makes a profit when sold. The earnings might actually not be more than £11.5k anyway tbh but if the £11.5k was spent on clothing stock a person has "profited" from their unsold stock holdings? hmmmm

Pennywise

PokerPlayer111 wrote: »

The person runs a business and can make their earnings for that tax year zero or £11.5k by buying tons of stock you see.

Unless you're a sole trader who has adopted the simplified cash accounting basis, then buying stock doesn't reduce taxable profits.