Capital gain -other income

Bowey123

I have had a capital gain this year so need to submit a capital gain return soon. However I don’t know what my other income will be for the year so am not sure whether the gain will be taxed at 18% or 28%.  Is it better to overpay the tax and just claim it back when the 2026 return goes in?

poseidon1

Bowey123 said:

I have had a capital gain this year so need to submit a capital gain return soon. However I don’t know what my other income will be for the year so am not sure whether the gain will be taxed at 18% or 28%.  Is it better to overpay the tax and just claim it back when the 2026 return goes in?

Was it a sale of residential property, if so what was the date of sale?

 Incidentally for the current tax year( 2025/26) there is no 28% CGT rate and in the previous tax year that rate only applied to disposals of interests in private equity/ hedge funds.

Bowey123

Thank you for your reply. Yes. It was from the sale of a residential property. 

poseidon1

Bowey123 said:

Thank you for your reply. Yes. It was from the sale of a residential property. 

On that basis and assuming the sale was within the current tax year, the tax charge will either be 24% or 18% depending on whether or not you turn out to be a higher rate tax payer.

Depends how large the tax bill is, as to whether it makes sense to potentially 'overpay' at 24%.
Bear in mind the interest charged on late payment of tax currently runs at 8% p.a and is linked to the bank of England base rate.

If your liability ( at 24%) runs to10s of thousands of pounds I would be inclined to pay on that basis, since HMRC interest would run on any underpaid tax up until the start of the new tax year ( and beyond ) depending on how quickly you prepare and submit the 25/26 tax return and make any necessary catch up payment, so could be quite a tidy sum of interest at stake.

If your liabilty underpayment proves to only be a couple of thousand, interest thereon even for a whole year would only be £160, so depends if you would find even that modest amount of interest objectionable as to whether you feel comfortable 'underpaying' at the 18% rate.

If you end up overpaying, HMRC will only pay you credit interest at a current rate of 3% ( base rate less 1%) albeit tax free, so do your sums as to the optimum outcome for your circumstances.

 One last observation, I assume your uncertainty regarding whether you could be a higher rate tax payer is a reasonable one, ie for the past 3-4 tax years or so  you were as likely as not to be a basic rate tax payer. If the contrary was the case, HMRC could find you negligent in calculating your tax at basic rate if you transpired to be higher rate ( yet again), and charge you penalties in addition to the interest charges.

Bowey123

Many thanks for your reply.