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Capital Gains

Capital gains tax is a complex area of Self Assessment and involves paying tax on any gains made from the sale or disposal of assets such as property or shares during the tax year. You’ll need to register and report any capital gains liability to HMRC on your Self Assessment tax return, taking note of the filing and payment deadlines.

Capital gains computations can be complicated, involving calculation of the amount of each gain (or loss), and taking into account your Annual Exempt Amount - your tax-free allowance for the year. You’ll also need to provide details of the cost and sale value of each asset, and specify any capital gains tax reliefs that are applicable.

Finding professional support when it comes to your CGT liability ensures you meet your obligations, and pay the correct amount of tax without risk of penalty. Handpicked Accountants can refer you to a number of reliable, fully qualified accountants in your area, based on our longstanding working relationships.

Capital gains tax rates and allowances for 2019/20

  • Annual Exempt Amount for individuals: £12,000
  • Individual basic rate taxpayers: 10% for disposals on or after 6th April 2016, apart from residential property or carried interest which are charged at 18%
  • Individual higher rate taxpayers: 20% for disposals on or after 6th April 2016, apart from residential property or carried interest which are charged at 28%
  • Entrepreneurs’ Relief: 10% on qualifying assets
  • The transfer of an asset between spouses and civil partners isn’t subject to capital gains tax

How to report and pay capital gains tax

There are two ways to report your capital gains tax liability – through the ‘real time’ Capital Gains Tax Service, and via your Self Assessment tax return. When using Self Assessment, gains should be reported in the tax year following disposal.

If you don’t usually file a tax return, you’ll need to register with HMRC by 5th October following the tax year in which you disposed of the asset(s). You can pay HMRC using a number of methods, including:

  • Online banking
  • Credit card or debit card
  • Telephone banking
  • CHAPS payment
  • BACS payment
  • Direct debit
  • Cheque

If you’re close to the payment deadline, you’ll also need to factor in the time it takes for your chosen payment method to clear with HMRC.

The HMRC website provides forms and guides to help you complete your tax return. Help sheets are available for completing the Self Assessment process in general, with notes being provided for each section of your tax return, including capital gains.

What are the capital gains tax summary pages?

Under some circumstances you’ll need to complete the summary pages for capital gains tax – supplementary pages SA108. For example, when:

  • The assets sold or disposed of were worth over £44,400 – certain exclusions apply, including if the asset was your main residence and you qualify for Private Residence Relief
  • You deducted losses from your chargeable gains, which prior to the deduction were more than the annual exempt amount of £12,000

A qualified accountant will be able to guide you on your liability for capital gains tax, carry out the necessary calculations, and ensure you don’t incur unnecessary charges from HMRC. For help with capital gains, and Self Assessment in general, contact one of the team at Handpicked Accountants. We’ll be able to quickly provide a shortlist of trustworthy and experienced accountants in your area, based on your individual needs.

David Tattersall
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