Capital Gain as only income

StayinAlive

I normally take a drawdown as my annual income but this year I have a large Capital Gain from property so I will postpone that and have the Capital Gain as my only "income".
I have seen examples of how CGT is worked out for basic income rate payers but not for zero income tax payers.
So, given a gain of 80K as an example, I am guessing the calculation goes something this:

Gain 80,000
Allowance 12300
Total taxable 67700
18% on 37500 = 6750
28% on 30200 = 8456
Total CGT payable = 15206

Appreciate if someone could confirm that's how it works.

StayinAlive

[Deleted User]

Yep - that’s how it works! 
Are you aware of this though?

https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

StayinAlive

Thanks for the links - I hadn't realised the time limitation for declaring capital gains had changed this year.

I had an interesting supplemental thought in that, if I were to take 12500 income drawdown i.e my personal allowance, would that affect those calculations. In other words do we get both CGT and IT allowances or would it just mean that the 12500 would be added to the amount on which tax is payable?

StayinAlive

Jeremy535897

That would be a sensible thing to do if you have no other taxable income, because the capital gains tax rate only takes account of taxable income. See:
https://www.gov.uk/capital-gains-tax/rates

oldbikebloke

StayinAlive said:

Thanks for the links - I hadn't realised the time limitation for declaring capital gains had changed this year.

I had an interesting supplemental thought in that, if I were to take 12500 income drawdown i.e my personal allowance, would that affect those calculations. In other words do we get both CGT and IT allowances or would it just mean that the 12500 would be added to the amount on which tax is payable?

StayinAlive

no drawdown - calculation as you show CGT £15,206

take drawdown - no impact on CGT amount, still 15,206
the reason being the income tax personal allowance does not reduce the capital gain, it merely sets the point at which the 28% CGT rate starts, ie, it may reduce the amount of the basic rate band "available" for the 18% rate.

12,500 drawdown gives you 12,500 income that you would not otherwise have, but still means the basic rate band is unaffected and remains the full 37,500 for CGT purposes. Take 13,000 and you'd pay income tax on 500 and your CGT would be 37,000 @ 18% and  30,700 @ 28%

Ray_Coman

That is correct, you can get the personal allowance and annual exemption in the same tax year and therefore it could work out tax efficient to drawdown so much income as equals your personal allowance.

terryoc1960

CAPITAL GAINS ALLOWANCE:
I have US company stock options I want to exercise and buy managed by a US broker. I was given the options in 2011. My 'gain' were I to sell them would be roughly £24000 (dollar equivilent) .
Could I exercise/sell and keep my gain in US drawing my max CG allowance
over the next 2 years ( I have used this years allowance) or would the sale immediately be counted against my allowance for this year and therefore attract taxation? In which case I would have to provide funds to purchase all of the stock and then sell an amount each year to keep below my annual allowance

badger09

terryoc1960 said:

CAPITAL GAINS ALLOWANCE:
I have US company stock options I want to exercise and buy managed by a US broker. I was given the options in 2011. My 'gain' were I to sell them would be roughly £24000 (dollar equivilent) .
Could I exercise/sell and keep my gain in US drawing my max CG allowance
over the next 2 years ( I have used this years allowance) or would the sale immediately be counted against my allowance for this year and therefore attract taxation? In which case I would have to provide funds to purchase all of the stock and then sell an amount each year to keep below my annual allowance

Could you please start a new thread, rather than tag onto this one with an unrelated question