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    • Anynick
    • By Anynick 10th Aug 18, 6:42 PM
    • 6Posts
    • 0Thanks
    Basic question on CGT bands
    • #1
    • 10th Aug 18, 6:42 PM
    Basic question on CGT bands 10th Aug 18 at 6:42 PM
    I have virtually no income - certainly in 18/19 my income will be much less than the 11850 personal allowance. 20 years ago I bought a bunch of different shares. I want to sell as many as possible this year without going over the limit for paying 10% CGT. But I'm not clear on what this limit is. I understand that the CGT rate is 10% if the total of taxable income and taxable gains is less than the basic rate band - because my 'taxable income' (income minus personal allowance) will be zero then I will pay 10% CGT on an amount up to the basic rate band. But is this 46350 (which is what the HMRC CGT pages direct me to) i.e. the income limit for basic rate tax, or 34500 i.e. the band between 11850 and 46350? Common sense says it must be 34500, wherever the HMRC site points me.

    There's no other complications - no houses involved, nothing tricky, just the shares. So:

    (1) If I have total gains of 58050, I deduct the CGT allowance of 11700 leaving 46350 taxable gains, and this is all charged at 10%, anything over this would be charged at 20%, or
    (2) I have total gains of 46200, I deduct the CGT allowance of 11700 leaving 34500 taxable gains, and this is all charged at 10%, anything over this would be charged at 20%.
Page 1
    • 00ec25
    • By 00ec25 10th Aug 18, 7:36 PM
    • 7,669 Posts
    • 7,351 Thanks
    • #2
    • 10th Aug 18, 7:36 PM
    • #2
    • 10th Aug 18, 7:36 PM
    your common sense is sharp

    yes, if you have no (income) taxable income then your (income) tax personal allowance is not used, but neither is it then "available" to offset against a capital gain, since income tax and capital gains tax are, as you appreciate, totally separate.

    with 0 "income", the 10% band is indeed from 0 - 34,500

    so with 58,050 of gross gain your CGT would be:
    a) 11,700 CGT tax free "annual" exempt amount @ free (it is an exempt amount so it is very technically wrong to call it a 0% band, it most certainly is not that, it is free.)
    b) next 34,500 @10% = 3,450 CGT
    c) remaining 58,050 - 11,700 - 34,500 = 11,850 @20% = 2,370
    total CGT to pay = 5,820

    Of course in the real world you state you have "virtually" no income, so let us take the example of you having:
    a) 2,000 of income pa. meaning 2,000 < 11,850 so your 10% band remains intact
    b) 12,000 of income pa. meaning 12,000 - 11,850 = 150 so you would lose 150 from your 10% band and it would therefore apply to only the first 34,350 of your gain (after having deducted the AEA from the gross gain figure of course.)
    Last edited by 00ec25; 10-08-2018 at 7:44 PM.
    • Anynick
    • By Anynick 10th Aug 18, 8:24 PM
    • 6 Posts
    • 0 Thanks
    • #3
    • 10th Aug 18, 8:24 PM
    • #3
    • 10th Aug 18, 8:24 PM
    Thanks - you have confirmed what I thought must be the case, and examples I have found on the web, albeit from other years. The HMRC CGT page is a bit misleading, or at any rate confusing - it says "If this amount is within the basic Income Tax band you will pay 10% on your gains" and the words "Income Tax band" there are a hyperlink to another HMRC page that shows a table:

    Personal Tax 0 to 11850 0%
    Basic rate 11,851 to 46,350 20%
    Hence my uncertainty. They are not exactly misleading, but they do leave you to work out the 'band' by subtraction - certainly not helpful.
    My gross income will definitely be much below the personal allowance. Some of it is dividends so it varies, but definitely not more than a few thousand.
    Last edited by Anynick; 10-08-2018 at 8:25 PM. Reason: Disallowed characters in the post
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