Start by working out your annual income, minus the Personal Allowance (currently £12,570) and any other tax reliefs you receive. Take that figure and add your capital gains from the year. Then reduce that number by the Capital Gains Tax allowance (currently £12,300).
Should I use my capital gains allowance?
If you have an investment portfolio, it makes sense to realise some profit each year to make use of your capital gains allowance, particularly if you have holdings that have grown significantly in value over time. This can reduce the future tax due and allows you to take some of the profits made to date.
Is there a limit on the amount of CGT relief you can claim?
The relief is provided by a special rate of CGT of 10%, on disposals up to a cumulative lifetime limit of £10M. This limit decreased to £1M for disposals on or after 11 March 2020. Gains which exceed the lifetime limit are taxed at the normal CGT rates according to the taxpayer’s level of income in the relevant tax year.
Are there any investments that are exempt from CGT?
Certain investments are exempt from CGT, although there may be qualifying conditions which need to be satisfied.
Do you pay CGT on growth in value of EIS shares?
There’s no CGT payable on any growth in the value of the EIS shares, but the deferred gain will become taxable. It’s possible to further defer these gains by investing in further subscriptions of EIS shares. Deferred gains which become taxable will be taxed at the prevailing main rate of CGT on the date of disposal of the EIS shares.
How are capital gains taxed on a disposal of a property?
If the capital gain deferred was from a buy-to-let property the gain must still be taxed at 18% or 28%. A deferred capital gain from a disposal of shares will be taxed at 10% or 20%. It’s possible to further defer these gains by investing in further subscriptions of EIS shares.
