Capital Gains Tax (CGT)
- CGT is payable by individuals, trustees and personal representatives (PRs)1. Companies pay corporation tax on their capital gains.
- There are annual tax-free allowances (the 'annual exempt amount') for individuals, trustees and PRs. Companies do not have an annual exempt amount.
- For individuals, net gains are added to total taxable2 income to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income, do not exceed the basic rate band3.
- Gains which qualify for Investors' Relief4 are charged at 10% for the first £10m of qualifying gains.
- Gains which qualify for Business Asset Disposal Relief5 are charged at 10% for the first £1 million.
Rates and annual exemption
| Individuals | 2022/23 |
|---|---|
| £ | |
| Exemption | 12,300 |
| Standard rate | 10% |
| Higher rate | 20% |
The higher rate applies to higher rate and additional rate taxpayers.
Gains accruing on the disposal of certain residential property and arising on carried interest can attract a standard rate of 18% or a higher rate of 28% for individuals and of 28% for Trusts and Personal Representatives.
| Trusts | 2022/23 |
|---|---|
| £ | |
| Exemption | 6,150 |
| Rate | 20% |
1 Personal representatives
A personal representative is either an executor for the estate of a deceased person who left a will or the administrator of an intestate estate.
2 Total taxable income
The total of income from all sources in excess of the personal allowances available to an individual. Income which is exempt from income tax, such as income from Individual Savings Accounts or casual gambling profits, are not taken into account when calculating total taxable income.
3 Basic rate band
Basic rate band refers to the band of income in excess of the personal allowances available to an individual which is taxable at basic rate.
4 Investors' Relief
Entrepreneurs’ Relief has been extended to external investors (other than certain employees or officers of the company) in unlisted trading companies. To qualify for the 10% CGT rate under ‘Investors’ Relief’ the following conditions need to be met:
- shares must be newly issued and subscribed for by the individual for new consideration
- be in an unlisted trading company, or an unlisted holding company of a trading group
- have been issued by the company on or after 17 March 2016 and have been held for a period of three years from 6 April 2016
- have been held continuously for a period of three years before disposal.
An individual's qualifying gains for Investors' Relief are subject to a lifetime cap of £10 million.
5 Business Asset Disposal Relief
If individuals sell or dispose of their business, they may be able to claim Business Asset Disposal Relief (known as Entrepreneurs' Relief prior to 6 April 2020) - which means paying 10% capital gains tax on profits.
- CGT is payable by individuals, trustees and personal representatives (PRs)1. Companies pay corporation tax on their capital gains.
- There are annual tax-free allowances (the 'annual exempt amount') for individuals, trustees and PRs. Companies do not have an annual exempt amount.
- For individuals, net gains are added to total taxable income2 to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income, do not exceed the basic rate band3.
- Gains which qualify for Investors' Relief4 are charged at 10% for the first £10m of qualifying gains.
- Gains which qualify for Business Asset Disposal Relief5 are charged at 10% for the first £1 million.
Rates and annual exemption
| Individuals | 2021/22 |
|---|---|
| £ | |
| Exemption | 12,300 |
| Standard rate | 10% |
| Higher rate | 20% |
The higher rate applies to higher rate and additional rate taxpayers.
Gains accruing on the disposal of certain residential property and arising on carried interest can attract a standard rate of 18% or a higher rate of 28% for individuals and a rate of 28% for Trusts and Personal Representatives.
| Trusts | 2021/22 |
|---|---|
| £ | |
| Exemption | 6,150 |
| Rate | 20% |
1 Personal representatives
A personal representative is either an executor for the estate of a deceased person who left a will or the administrator of an intestate estate.
2 Total taxable income
The total of income from all sources in excess of the personal allowances available to an individual. Income which is exempt from income tax, such as income from Individual Savings Accounts or casual gambling profits, are not taken into account when calculating total taxable income.
3 Basic rate band
Basic rate band refers to the band of income in excess of the personal allowances available to an individual which is taxable at basic rate.
4 Investors' Relief
Entrepreneurs’ Relief has been extended to external investors (other than certain employees or officers of the company) in unlisted trading companies. To qualify for the 10% CGT rate under ‘Investors’ Relief’ the following conditions need to be met:
- shares must be newly issued and subscribed for by the individual for new consideration
- be in an unlisted trading company, or an unlisted holding company of a trading group
- have been issued by the company on or after 17 March 2016 and have been held for a period of three years from 6 April 2016
- have been held continuously for a period of three years before disposal.
An individual's qualifying gains for Investors' Relief are subject to a lifetime cap of £10 million.
5 Business Asset Disposal Relief
If individuals sell or dispose of their business, they may be able to claim Business Asset Disposal Relief (known as Entrepreneurs' Relief prior to 6 April 2020) - which means paying 10% capital gains tax on profits.