basic to higher rate taxpayer due to CGT

Imvrasos Forumite Posts: 77
Sixth Anniversary 10 Posts
Apologies if already discussed but I didn't see a relevant topic in this subforum and I am highly confused from online sources.

I am aware that even 0%-taxed savings interest below £1k can push a taxpayer in the higher rate and create a tax event due to the reduced allowance. Would the same apply for capital gains, falling within the CGT allowance?

So assume a vanilla taxpayer with an income of £50k this tax year. The individual disposes an ETF with capital gains of say £5k, below the allowance. However would this additional capital gains be added to the general income and hence resegment this basic taxpayer into the higher rate?


  • purdyoaten2
    purdyoaten2 Forumite Posts: 3,788
    Seventh Anniversary 1,000 Posts Photogenic Name Dropper
    The answer is No! If the gain was over the CGT allowance, the amount in excess of that would create the result that you describe. 

    (Ha sido divertido)
  • Jeremy535897
    Jeremy535897 Forumite Posts: 10,237
    10,000 Posts Third Anniversary Name Dropper
    The amount of income determines the rate of capital gains tax, but the amount of capital gain can never affect the rate of income tax.
  • Imvrasos
    Imvrasos Forumite Posts: 77
    Sixth Anniversary 10 Posts
    Many thanks to both posters, purdyoaten2 and Jeremy535897 for the direct clarity. I interpret the reasoning as savings interest being seen as 'income' and hence wholesomely affecting the income tax segment (and not just its non-0% amount) which isn't the case for capital gains.

    I presume dividends are treated similarly to interest then, to be added to general income even when they are below the allowance of £1k, this year?
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