Capital Gain tax and all income tax

Leakingtile79

Hello all! I hope you are having a wonderful Sunday. I have a question I hope you can help me with for this tax year, as never had to declare CG before.

I have some questions about capital gains from selling/buying shares and options. As the allowance for 24/25 is £3000, I wonder how do they get taxed in conjunction with the rest of your income, let's put some numbers to show my questions more clearly:

For 24/25, I expect and income from employment to be £45k, income from non ISA dividends to be £2K, and net capital gains to be £4K (this is net of operations for the year), plus saving income of £500.
 

- for capital gains, do they just get taxed individually? Or you have to add them to your total income, as with dividend and saving income, then pay tax accordingly? As going over the £50K mark of total income will change how dividends+savings are taxed. In the numbers above, total income would be £47.5K plus the CG income of £4.5K. If using the total income of £47.5K,  that would mean a different outcome in taxes paid (mostly dividend tax, as rate under £50K is 8.75% and over is 34% approx, for the div. Income over the £500 personal allowance) than adding the CG income to the total income which will increase the tax bill.

- If the total CG income (net) is below  the personal allowance limit, is there a need to report it? Also, imagine you have £6K in gains and £2K in losses, using the £3K llowamce would means you pay taxes only for the £1K remaining?

- if I had CG losses not reported in previous tax years (I didn't file a tax return, but I could gather the evidence anyway), could I claim this losses to compensate for present or future gains over the CG allowance?

Many thanks for your responses. I hope the questions are clear enough!

eskbanker

While capital gains and income are added together to establish the rate of CGT to pay, it doesn't work the other way round, i.e. capital gains don't influence your income tax liability.

The pages at https://www.gov.uk/capital-gains-tax answer your other questions....

Nomunnofun1

Leakingtile79 said:

Hello all! I hope you are having a wonderful Sunday. I have a question I hope you can help me with for this tax year, as never had to declare CG before.

I have some questions about capital gains from selling/buying shares and options. As the allowance for 24/25 is £3000, I wonder how do they get taxed in conjunction with the rest of your income, let's put some numbers to show my questions more clearly:

For 24/25, I expect and income from employment to be £45k, income from non ISA dividends to be £2K, and net capital gains to be £4K (this is net of operations for the year), plus saving income of £500.
 

- for capital gains, do they just get taxed individually? Or you have to add them to your total income, as with dividend and saving income, then pay tax accordingly? As going over the £50K mark of total income will change how dividends+savings are taxed. In the numbers above, total income would be £47.5K plus the CG income of £4.5K. If using the total income of £47.5K,  that would mean a different outcome in taxes paid (mostly dividend tax, as rate under £50K is 8.75% and over is 34% approx, for the div. Income over the £500 personal allowance) than adding the CG income to the total income which will increase the tax bill.

- If the total CG income (net) is below  the personal allowance limit, is there a need to report it? Also, imagine you have £6K in gains and £2K in losses, using the £3K llowamce would means you pay taxes only for the £1K remaining?

- if I had CG losses not reported in previous tax years (I didn't file a tax return, but I could gather the evidence anyway), could I claim this losses to compensate for present or future gains over the CG allowance?

Many thanks for your responses. I hope the questions are clear enough!

Reporting losses - note time limit. 

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

Leakingtile79

Nomunnofun1 said:

Leakingtile79 said:

Hello all! I hope you are having a wonderful Sunday. I have a question I hope you can help me with for this tax year, as never had to declare CG before.

I have some questions about capital gains from selling/buying shares and options. As the allowance for 24/25 is £3000, I wonder how do they get taxed in conjunction with the rest of your income, let's put some numbers to show my questions more clearly:

For 24/25, I expect and income from employment to be £45k, income from non ISA dividends to be £2K, and net capital gains to be £4K (this is net of operations for the year), plus saving income of £500.
 

- for capital gains, do they just get taxed individually? Or you have to add them to your total income, as with dividend and saving income, then pay tax accordingly? As going over the £50K mark of total income will change how dividends+savings are taxed. In the numbers above, total income would be £47.5K plus the CG income of £4.5K. If using the total income of £47.5K,  that would mean a different outcome in taxes paid (mostly dividend tax, as rate under £50K is 8.75% and over is 34% approx, for the div. Income over the £500 personal allowance) than adding the CG income to the total income which will increase the tax bill.

- If the total CG income (net) is below  the personal allowance limit, is there a need to report it? Also, imagine you have £6K in gains and £2K in losses, using the £3K llowamce would means you pay taxes only for the £1K remaining?

- if I had CG losses not reported in previous tax years (I didn't file a tax return, but I could gather the evidence anyway), could I claim this losses to compensate for present or future gains over the CG allowance?

Many thanks for your responses. I hope the questions are clear enough!

Reporting losses - note time limit. 

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

Thanks for the reply. But still, it says " you can call to declare or write hrmc". This sounds a bit vague to me, as giving these details over the phone is tricky, cannot see a form or a more formal way of reporting it. Again, didn't do a tax return for those years, would I need one now? If that's the case, would I get a penalty for sending the tax return out of date?

Leakingtile79

eskbanker said:

While capital gains and income are added together to establish the rate of CGT to pay, it doesn't work the other way round, i.e. capital gains don't influence your income tax liability.

The pages at https://www.gov.uk/capital-gains-tax answer your other questions....

Thanks for the reply. So, let's say, with the numbers above CG go aside. Your total work income+dividend+savings will determine savings and dividend rates to be paid and allowances ( depending on being above the £50K mark), but CG does add to that, and also is taxed independently. How do you know the tax rate you have to pay for capital gains btw? Thanks!

Nomunnofun1

Leakingtile79 said:

Nomunnofun1 said:

Leakingtile79 said:

Hello all! I hope you are having a wonderful Sunday. I have a question I hope you can help me with for this tax year, as never had to declare CG before.

I have some questions about capital gains from selling/buying shares and options. As the allowance for 24/25 is £3000, I wonder how do they get taxed in conjunction with the rest of your income, let's put some numbers to show my questions more clearly:

For 24/25, I expect and income from employment to be £45k, income from non ISA dividends to be £2K, and net capital gains to be £4K (this is net of operations for the year), plus saving income of £500.
 

- for capital gains, do they just get taxed individually? Or you have to add them to your total income, as with dividend and saving income, then pay tax accordingly? As going over the £50K mark of total income will change how dividends+savings are taxed. In the numbers above, total income would be £47.5K plus the CG income of £4.5K. If using the total income of £47.5K,  that would mean a different outcome in taxes paid (mostly dividend tax, as rate under £50K is 8.75% and over is 34% approx, for the div. Income over the £500 personal allowance) than adding the CG income to the total income which will increase the tax bill.

- If the total CG income (net) is below  the personal allowance limit, is there a need to report it? Also, imagine you have £6K in gains and £2K in losses, using the £3K llowamce would means you pay taxes only for the £1K remaining?

- if I had CG losses not reported in previous tax years (I didn't file a tax return, but I could gather the evidence anyway), could I claim this losses to compensate for present or future gains over the CG allowance?

Many thanks for your responses. I hope the questions are clear enough!

Reporting losses - note time limit. 

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

Thanks for the reply. But still, it says " you can call to declare or write hrmc". This sounds a bit vague to me, as giving these details over the phone is tricky, cannot see a form or a more formal way of reporting it. Again, didn't do a tax return for those years, would I need one now? If that's the case, would I get a penalty for sending the tax return out of date?

Whether you think it’s vague or not, that is what is required. No necessity to complete a return. 

Nomunnofun1

Leakingtile79 said:

eskbanker said:

While capital gains and income are added together to establish the rate of CGT to pay, it doesn't work the other way round, i.e. capital gains don't influence your income tax liability.

The pages at https://www.gov.uk/capital-gains-tax answer your other questions....

Thanks for the reply. So, let's say, with the numbers above CG go aside. Your total work income+dividend+savings will determine savings and dividend rates to be paid and allowances ( depending on being above the £50K mark), but CG does add to that, and also is taxed independently. How do you know the tax rate you have to pay for capital gains btw? Thanks!

Work out how much of your basic rate band ,normally £37700, has been utilised at other sources of income. Let’s say it is £35000. 

The first £2700 of any capital gain after exemption will be charged at the lower rate with the remainder at the higher rate.