Rate Of Corporation Tax Print

The rate at which CGT is charged depends upon the income tax rate of the person making the disposal. Individuals pay CGT at a reduced rate where their total taxable gains and income are less than the upper limit of the income tax basic rate band of £34,500 for 2018/19, and £37,500 for 2019/20, but this is after any personal allowances etc. Gains in excess of this limit are taxed at the full rates. Trustees pay CGT at the full rate on all gains.

With the exception of gains arising on the disposal of residential property that does not qualify for Principal Private Residence (“PPR”) relief, and gains on carried interest, for 2018/19 and 2019/20 the rates of CGT are as follows:

Reduced Rate Full Rate
Residential property and carried interest 18% 28%
All other capital gains 10% 20%

Entrepreneurs’ Relief which charges certain gains at the rate of 10% may be available in respect of certain business assets. (See section on Entrepreneurs’ Relief)

The calculation of most gains is very straightforward.

Example 1:

Jill bought a house to let in August 1987 at an overall cost of £61,400. In September 2001 she spent a further £58,000 on an extension. She sells the house in February 2019 for proceeds (after costs) of £355,200. She has no other gains in the year, and her taxable income after personal allowances is £25,000 Her CGT liability is calculated as follows:

£ £
Sale Proceeds 355,200
Less Cost 61,400
Enhanced expenditure 58,000
119,400
Gain 235,800
Less Annual Exemption 11,700
Taxable Gain 224,100
Tax thereon @18% (34,500 – 25,000)

@ 28%

9,500

214,600

1,710

60,088

Total CGT Payable 61,798

Example 2:

In May 2010 Allan bought some shares in a listed company for £60,000. He sells the shares for £150,000 in September 2018. Allan made no other gains in the year and is a higher rate taxpayer. His CGT liability is calculated as follows:

£
Sale Proceeds 150,000
Less Cost 60,000
Gain 90,000
Less Annual Exemption 11,700
Taxable Gain 78,300
Total CGT Payable @20% 15,600

Start a Conversation

How can we help you? Please complete all fields