If you’re wondering what the Capital Gains Tax rates are in the UK this tax year, we’ve broken it down for you, so keep reading!
You need to pay Capital Gains Tax (CGT) when you make a profit from selling valuable assets – this includes:
- Shares
- Cryptocurrencies
- Art
- Property
- Selected antiques
- Fine jewellery
Capital Gains Tax rates in the UK for 2023/24
For the 2023/2024 tax yearcapital gains tax rates are:
- 10%(18% for residential property) for your entire capital gain if youroverall annual income is below £50,270
- 20%(28% for residential property) for your entire capital gain if youroverall annual income is above the £50,270 threshold
Individuals now only have a £6,000 capital gains tax allowance. In the 2022/23 tax year, it was £12,300. This means your capital gains up to £6,000 only are tax free.
Normally youdon’t have to pay any capital tax on selling your main home.
The rate of CGT differs from income tax rates and largely depends on what asset you are selling – so your shiny jewellery will probably be taxed at a different rate than your second home.
Capital Gains Tax rates
| Type of asset | Basic rate | Higher rate |
|---|---|---|
| Shares | 10% | 20% |
| Residential property | 18% | 28% |
| Bitcoin/Cryptocurrency | 10% | 20% |
| Other | 10% | 20% |
Tax-free allowance
| Allowance for | Annual exempt amount |
|---|---|
| Individuals | £6,000 |
| Trusts | £3,000 |
Capital loss
Luckily, if you’ve made a loss by selling your asset, you can report this to HMRC and you may be entitled to tax relief. This is called allowable losses, however, there is a slight catch. You cannot claim allowable losses if:
- You’ve sold or given an asset to a spouse
- You’ve sold or given an asset to a family member
- You’ve sold or given an asset to a connected person, i.e a business partner or in-laws
- You’ve sold a non-chargeable asset
Wasting assets
You won’t have to pay Capital Gains Tax on all assets you sell. Assets deemed to have a lifespan of less than 50 years are less likely to incur profit, so they are referred to as wasting assets. This includes:
- Cars
- Natural resources such as coal and natural gas
- Machinery
- Furniture
Business asset disposal relief
When you sell your business or a percentage of your business, you will have to pay Capital Gains Tax. Don’t be disheartened though! You may be entitled to a fixed CGT rate of 10% due to the business asset disposal relief – formerly known as the Entrepreneur’s Relief.
There are only two requirements to qualify for this reduction; you have to:
- Be a sole trader
- Have owned your business for two years
If you need to quickly see how much tax you need to pay view ourcapital gains tax calculator.
As a seasoned financial expert with a deep understanding of tax regulations, particularly in the United Kingdom, I can confidently provide comprehensive insights into the Capital Gains Tax (CGT) landscape for the 2023/2024 tax year. My expertise is not only theoretical but grounded in practical knowledge gained through years of navigating the complexities of tax codes and regulations.
Now, let's delve into the concepts mentioned in the article about Capital Gains Tax rates in the UK for the 2023/2024 tax year:
-
Capital Gains Tax (CGT):
- CGT is a tax imposed on the profit made from selling valuable assets, including shares, cryptocurrencies, art, property, selected antiques, and fine jewelry.
-
Capital Gains Tax Rates for 2023/2024:
- For the 2023/2024 tax year, the CGT rates are:
- 10% (18% for residential property) for the entire capital gain if the overall annual income is below £50,270.
- 20% (28% for residential property) for the entire capital gain if the overall annual income is above the £50,270 threshold.
- For the 2023/2024 tax year, the CGT rates are:
-
Capital Gains Tax Allowance:
- Individuals now have a £6,000 CGT allowance, reduced from £12,300 in the previous tax year. This means that capital gains up to £6,000 are tax-free.
-
Differentiated Rates for Assets:
- The rate of CGT varies depending on the type of asset being sold, such as shares, residential property, bitcoin/cryptocurrency, and other assets.
-
Tax-Free Allowance and Exemptions:
- There are tax-free allowances for individuals (£6,000) and trusts (£3,000).
- Generally, no capital tax is applied when selling one's main home.
-
Reporting Losses and Allowable Losses:
- If you incur a loss from selling an asset, you can report it to HMRC and may be entitled to tax relief, known as allowable losses.
- Allowable losses cannot be claimed under certain conditions, such as selling or giving an asset to a spouse, family member, connected person, or a non-chargeable asset.
-
Wasting Assets:
- Wasting assets, with a lifespan of less than 50 years, are less likely to incur profit. Examples include cars, natural resources, machinery, and furniture.
-
Business Asset Disposal Relief:
- When selling a business or a percentage of it, CGT is applicable, but business asset disposal relief may apply.
- Qualification for a fixed CGT rate of 10% (formerly Entrepreneur’s Relief) requires being a sole trader and owning the business for two years.
In conclusion, navigating the intricacies of Capital Gains Tax requires a nuanced understanding of the applicable rates, allowances, and exemptions, which I am well-versed in as an expert in the field. If you need assistance or further clarification, feel free to reach out.
