The UK Rules
'Follow the Regulations'
Working Out CGT

Working Out Capital Gains Tax

How to work out your Capital Gains Tax on disposals the simple way and then make a report on your Self Assessment form and pay the tax bill to HMRC.

CALCULATE CGT: There is a simple way of working out if you need to pay Capital Gains Tax on the sale or disposal of many personal possessions and business assets.

CGT is due if the amount of all your profits and other taxable income, excluding any exemptions, is higher than your personal yearly tax-free Capital Gains Tax allowance - called your annual exempt amount.

There are three basic steps for working out your total taxable gains.

  1. First, calculate the gain for each asset that you have sold (or disposed of) in the tax year from the 6th of April to the 5th April that follows. This must include profit realised on property, personal possessions, business assets, or investment shares.
  2. Then you should find the total amount of all profits from the assets which have been disposed of (or sold).
  3. Thirdly, subtract all of your allowable losses to find out how much CGT you need to pay.

You must report and pay Capital Gains Tax if your taxable profits, minus your personal tax allowance, is a positive value.

When Total Gains are Less than Your Allowance

Capital Gains Tax is not payable in cases where the net taxable gain is an amount less than your personal tax-free allowance. There are exceptions to these rules. You still need to inform Her Majesty's Revenue and Customs if;

Note: Write to HMRC if you are not registered for a Self Assessment tax return and other rules apply if you need to report a loss.

If You Have Nothing to Report

If you currently do not fill in a Self Assessment form and are not registered, then it is unnecessary to do anything at all. However, if you are using Self Assessment tax return forms you still need to complete the Capital Gains section by following these three steps.

  1. In the section marked 'Tailor your return' you should confirm that you are completing the Capital Gains portion.
  2. Under the section marked 'Details of Chargeable Assets' you should select 'No' for all questions.
  3. Send in your tax return form following the usual deadlines and regulations for Self Assessment.

Non-resident Status

As a non-resident you do not need to pay tax on most types of Capital Gains but you must make a report if you sell (dispose of) your residential property. This rule also applies even if you make a loss or the gain is below your annual tax-free allowance.

Reporting and Pay Capital Gains

You need to report your payable Capital Gains Tax on your Self Assessment tax return form. Non-residents must contact HM Revenue and Customs within 30 days of selling a UK residential property, even in circumstances where there is no taxable payment due or liable.

Tax Year after you Disposed of Assets

If you do not normally complete a tax return but have sold (disposed of) chargeable asset(s) you must register for Self Assessment by the 5th of October following the relevant tax year of the sale. A reminder letter is sent out to those who are registered for Self Assessment. Contact HMRC if you do not receive a reminder letter.

Note: If you submit your tax return electronically, it must be done by the 31st of January and the deadline is the 30th of October for paper forms.

Completing Your Tax Return Online

For each Capital Gain (profit) or loss that you report, it is required for you to include your calculations. You must also keep records about the costs and the proceeds for each asset. If you are entitled to any reliefs or other exceptions, you need to include these details too.

Note: You can get further help working out your Capital Gains Tax rate or submitting a tax return from a tax adviser or an accountant.

After You Send Your Tax Return

HM Revenue and Customs will inform you if you are entitled to a refund or any time you owe tax for the year you have declared. You must settle your tax bill by the given deadline.

Important Information iconThere are penalties for those who;

Working Out Your Capital Gains Tax then Report and Pay CGT; UK Rules Updated 2017