1. What is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax on the profit when you sell (or 'dispose of') something (an 'asset') that's increased in value. In the UK for 2023/24, you have a £6,000 tax-free allowance before CGT applies.

2. How Does the Calculator Work?

The calculator uses the CGT formula:

Where:

• \( Gain \) — Profit from the sale of the asset
• \( £6,000 \) — Annual exempt amount (2023/24)
• \( 10\% \) — Basic rate for most assets
• \( 20\% \) — Higher rate for most assets

Explanation: The calculation first deducts your tax-free allowance, then applies the appropriate tax rate to the remaining gain.

3. Importance of CGT Calculation

Details: Accurate CGT calculation helps with tax planning, ensures compliance with HMRC requirements, and helps avoid unexpected tax bills.

4. Using the Calculator

Tips: Enter your total gain in GBP, select your applicable tax rate (10% for basic rate taxpayers, 20% for higher rate). The calculator will deduct the £6,000 allowance automatically.

5. Frequently Asked Questions (FAQ)

Q1: What counts as a capital gain?
A: Profits from selling property (not your main home), shares, business assets, and other valuable items may be subject to CGT.

Q2: Are there different rates for different assets?
A: Yes, residential property has different rates (18% and 28%). This calculator covers the standard CGT rates.

Q3: When do I need to pay CGT?
A: CGT is typically due by 31 January following the end of the tax year in which you made the gain.

Q4: Can I offset losses against gains?
A: Yes, capital losses can be offset against gains in the same tax year or carried forward.

Q5: Is the allowance changing?
A: The allowance is reducing to £3,000 in 2024/25, so plan disposals accordingly.