Working out the tax due

To work out the tax due, you add together all the capital gains you have made for the year. Then you deduct any capital losses and the annual exemption. The resulting figure is the amount to be taxed.

For disposals on or after 23 June 2010, the tax rate for capital gains is 18% where the total of a person’s income and gains does not exceed the basic rate tax band. If the total of income and gains is above this limit then the tax rate is 28%.

Example – disposal in 2012/13:

Capital Gain on antique furniture                         10,000
Capital Gain on sale of cottage                           20,000
Total Capital Gains                                              30,000

Less Capital Loss on shares                             (12,000)
Net Capital Gains                                                 18,000

Annual Exemption                                                10,600
Net gain on which tax is due            £7,900

Tax on chargeable gains £7,900 x 18% =       £1,422

The 18%  tax rate assumes that the individual’s taxable income and gains – after allowances – are within the basic rate income tax band of £34,370 for 2012/13.

Capital gains tax can be complex so it is best to take advice on specific circumstances.