The UK Rules
'Follow the Regulations'
Tax Rate 2016-17

Capital Gains Tax Rate 2016-17

This section explains the Capital Gains Tax rates for gains made after the new tax rules take full effect beginning on the 6th of April 2016.

CGT RATE FROM 6 APRIL 2016: You need to inform HMRC when you have finished working out if you need to pay Capital Gains Tax by the tax return online form or in paper form.

Her Majesty's Revenue and Customs then calculate the total amount that you owe in Capital Gains Tax based on the tax rate for that particular year.

An exception to this rule applies for non-residents who sell a UK residential property.

Non-residents must inform HMRC within 30 days of the property conveyance (e.g. If the conveyance takes place on the 1st of March, you must report the sale (or disposal) to Her Majesty's Revenue and Customs before the 31st of March.

The rules on tax for gains on general assets are different to those on residential property. As a general rule you do not tax when you sell your main home.

Capital Gain Rates 2016/17

Higher Rate Income Tax

The Capital gains Tax rate for an additional or higher rate taxpayer from the 6th of April is;

Basic Rate Income Tax

If you are a basic rate taxpayer, the rate you pay depends on the size of your gain, your taxable income, and whether your gain is from residential property or other assets.

  1. You need to work out your normal Taxable Income (income less your Personal Tax Allowance) and any entitled Income Tax reliefs.
  2. Calculate your total taxable gains (profits).
  3. Deduct your Tax-Free allowance.
  4. Add this to your taxable income.
  5. You will pay 10% Capital Gains Tax (or 18% on residential property) if the amount is within the Basic Income Tax band for 2016 to 2017 tax year. Any amount above this has a 20% (or 28% on residential property) tax.

An Example:

Your taxable income is your Income less your Personal Allowance less any Income Tax relief [£40,000 - £10,600 - £4,400 = £25,000]

Your Taxable Gain is your gains (profit) less the Tax-Free allowance [£12,600 - £11,100 = £1,500]

Note: You claim the first £10,000 of your Tax-Free Allowance against your Residential Property gain. This is because it has the higher rate of tax so it is best to use your Allowance against the higher rate gains.

Add your taxable income to your taxable gain [£25,000 + £1,500 = £26,500]

The basic rate tax band, for 2016 to 2017, is £32,000.

At £26,500 you are below the basic tax band rate and your residential property gain is less than your Tax-Free allowance, therefore you pay 10% on your taxable gain.

Your Capital Gains Tax payable is £1,500 x 10% = £150

Gains from both Residential Property and Other Assets

You can use your tax-free allowance against the gains that would be charged at the highest rates (e.g. where you would pay 28% tax).

CGT Rate for Trustee or Business

In cases where someone has died, their personal representative or trustees will pay Capital Gains Tax, either from the estate or trust at a CGT rate of;

If you are a Partnership or Sole Trader and your gains qualify for Entrepreneurs' Relief you will pay 10% Capital Gains tax.

Capital Gains Tax Rate from 6th April 2016; UK Rules Updated 2017