Capital Gains Allowance

niklas19

I just want to confirm my understanding of capital gains tax free allowance.

Considering a hypothetical situation where I have two investments A and B and let's say, I crystallise a gain on investment A of £5k and a loss on investment B of £3k which sum up to an overall gain of £2k.  This is well within the tax free allowance but I'm not sure whether I'm still supposed to declare that on my self assessment tax return (considering that one of the gains was above £3k)?

poseidon1

niklas19 said:

I just want to confirm my understanding of capital gains tax free allowance.

Considering a hypothetical situation where I have two investments A and B and let's say, I crystallise a gain on investment A of £5k and a loss on investment B of £3k which sum up to an overall gain of £2k.  This is well within the tax free allowance but I'm not sure whether I'm still supposed to declare that on my self assessment tax return (considering that one of the gains was above £3k)?

Seems to me that having regard to the CGT notes for 2023/24  and logically reading across to the reduced £3,000 exemption for the current year, you will be required to complete self assessment CGT pages for 2024/25 because your gain exceeds £3000 and you wish to claim the £2000 loss against it.

Furthermore, even without the £5,000 gain you would need to complete the CGT supplementary pages to log your £2,000 allowable loss for use in future years.

phlebas192

poseidon1 said:

niklas19 said:

I just want to confirm my understanding of capital gains tax free allowance.

Considering a hypothetical situation where I have two investments A and B and let's say, I crystallise a gain on investment A of £5k and a loss on investment B of £3k which sum up to an overall gain of £2k.  This is well within the tax free allowance but I'm not sure whether I'm still supposed to declare that on my self assessment tax return (considering that one of the gains was above £3k)?

Seems to me that having regard to the CGT notes for 2023/24  and logically reading across to the reduced £3,000 exemption for the current year, you will be required to complete self assessment CGT pages for 2024/25 because your gain exceeds £3000 and you wish to claim the £2000 loss against it.

Furthermore, even without the £5,000 gain you would need to complete the CGT supplementary pages to log your £2,000 allowable loss for use in future years.

HMRC guidance seems contradictory in this area. When submitting a SA the notes certainly imply that you need to submit the details if your total gains are over the personal allowance (ie gains before losses). But the guidance elsewhere (eg https://www.gov.uk/capital-gains-tax/reporting-and-paying-capital-gains-tax) says total taxable gains which logically is gains minus losses. I've always taken the cautious route and filled in the CGT section.

nb: if you only have losses, you don't need to report them in the SA (although it makes sense to do so if you have to complete one anyway). In theory, all you need to do is tell HMRC about them up to 4 (I think) years after they were incurred

masonic

The tax return notes (2023/24) seem fairly clear on this to me (and follow the same general form as prior years):

Assuming the OP has not made disposals greater than £50k, then having made gross gains of only £5k, they would not need to add the Capital gains pages to their return. However, the same transactions made in 2024/25 would probably need to be declared as the gross gains will be over the current £3k annual exempt amount, even though no tax would actually result from the net gain.