Into the weeds of CGT

valiant24

Apologies in advance if this is the wrong forum:

I under-estimated a little my dividend earnings for the tax year ended 5/4/22, took a little too large UFPLS from my SIPP.  As a result I am a thousand or so into the higher rate tax band.

Hardly a big deal except ... I made capital gains of about £80k last year.  My understanding is that, because of that small creep out of basic rate tax, I'll pay 20% CGT instead of 10%, so an avoidable cost of about £8,000.

Does that sound right?  I really struggle to find anywhere that explains exactly how this works.

Thanks
V

spider42

No, that doesn't sound right. Only the amount of gain which falls within your basic rate band is taxed at 10%, and then the rest is at 20%.

So if you had been say £1,000 within the higher rate threshold, then you would have paid £1,000 @ 10%, and £79,000 at 20%. You don't get the whole gain taxed at 10%. So in reality, being slightly into higher rate will make very little difference to the CGT.

spider42

PS As you've mentioned rates of 10% and 20%, then I'm assuming the gain doesn't relate to a residential property. If it did, then the rates would be 18% and 28% respectively.

valiant24

spider42 said:

PS As you've mentioned rates of 10% and 20%, then I'm assuming the gain doesn't relate to a residential property. If it did, then the rates would be 18% and 28% respectively.

It was on the sale of shares.

Dazed_and_C0nfused

https://www.gov.uk/capital-gains-tax/rates

valiant24

OK thank you all.