CGT Allowance 2024/25

CGT Allowance 2024/25 – The government has already announced a drop in the capital gains tax exemption limit from £6,000 to £3,000. However, the Spring Budget revealed that the higher rate of the CGT allowance for UK residential property disposals will be lowered from 28% to 24%.

When you work on your tax return, you’ll be delighted to find that you have a CGT Allowance of £3,000 for individuals (£1,500 for trusts) for 2024/25. It will once again depend on your tax bracket whether you pay capital gains tax on stocks and shares; profits will be taxed at 10% or 20% depending on your tax bracket.

You can trade assets between you for those in a civil partnership or otherwise if you co-own taxable assets, such as a second house, to double the allowance. A partner will pay CGT based on the overall period in which they held the asset(s) together, rather than the date of transfer if you sell assets to them and then profit from them later.

When you sell your main house, you will not have to pay CGT, but you will have to pay CGT if you rent it out, use it for business, or it is particularly large. Your tax bracket will determine whether you pay 18% or 24% CGT.

Capital gains tax rate in 2024/25

There is a significant difference between income tax rates and capital gain tax rates. You have to do some calculations to calculate what percentage you must pay on each profit, even though your CGT rate is partly determined by your taxable income.

CGT rates are based on taxable income and asset type. There are two CGT rates available to basic rate taxpayers and higher rate taxpayers.

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Capital gains tax rate in 2024/25

Tax band	Taxable income	CGT % rate on residential property gains	CGT % rate on other asset gains
Basic rate	£12,571 to £50,270	18%	10%
Higher or additional rate	£50,271 and over	24%	20%

A 40% tax rate is applicable if your taxable income exceeds £50,271 and you fall in this bracket if your taxable income exceeds £50,271.

How do you calculate capital gains tax?

Using these resources can assist you in determining whether you have to pay capital gains tax. If you have several taxable assets, it might take a bit of time. For more information, visit the gov.uk website.

If you don’t have a self-assessed tax return, you can pay what you owe straight away using the UK government’s CGT service.

Rather than caused problems, interest, and penalties, completing your tax returns correctly can actually be rather profitable. A will will be able to identify any tax relief, as well as examine your income and expenses.

How to reduce your capital gains tax bill?

You can reduce your capital gains tax burden by following these tips.

The advice you get can help you maximize your chances of getting tax relief and ensuring that you pay what you owe.
Your £3,000 pre-tax limit is thus fully utilized by both of you.
You should notify HMRC if you have any losses so they can balance your profits and provide you with a revised contribution amount.
The CGT allowances cannot be carried over into the next tax year, so it is essentially a matter of utilizing them or losing them.
With PPR, you can sell your primary residence or former primary residence without having to pay capital gains tax.
The life span of these items is less than fifty years, including vintage automobiles, caravans, and antique clocks.
Your savings are tax-free in both accounts.
You can claim income and capital gains tax relief when you donate shares, land, or property to a charity.
The result may be a lower CGT bracket for you.
You will pay CGT based on your taxable assets (and nontaxable assets), your allowance, and how and when you pay CGT.

When do you pay capital gains tax?

There are a few exceptions to CGT on second houses (or non-primary residential property). CGT on second houses (or non-primary residential property) must be reported sixty days after the sale.

A CGT declaration must be completed online by January 31; paper filings must be completed by October 31. The sale of a house must be reported to the government within sixty days of the property being sold.

The HMRC’s real-time CGT service should be used, and this should be entered by December 31 of the year following the year of your profits.