Starting Rate for Capital Gains Tax?

p3gg

I have a question about what happens in a "freak" tax year when all your income falls within your personal allowance (e.g. £4,895 in 2005/6) but you also have a capital gains liability incurred during the year. After your capital gains exemption (£8,500 this year), is the next £2,090 of the chargeable gain taxed at 10%, or does it go straight in at the basic rate for CGT of 20%?

I saw that someone had posted to another website that the 10% starting rate is applicable in those circumstances, but I wasn't sure how reliable this was, and would appreciate info/confirmation from one of you "experts" here on the MSE forums!

Elaine_Wilson

Yes, the starting rate does apply to capital gains in these circumstances.

From the wording of your question I assume you already know that any unused part of the personal allowance would not be available.

If you would like to see this in black and white there is a nice little table at the front of the Comprehensive Tax Calculation Guide which you can get from the Revenue. (Or at least there was in the 2004 guide. I haven't received my copy of the 2005 one yet.) It may be online but I don't use the Revenue website very often.

Elaine

p3gg

Thanks Elaine,

I've just checked out the Comprehensive Tax Calculation Guide (04/05) online, and yes, it's there in black and white!