Capital Gains Tax
Summary - Steps of a CGT calculation
Step 1
First identify whether you have a chargeable asset which is the subject of a chargeable
disposal by a chargeable person in the current Tax Year.
Step 2
Then explain/calculate the gain e.g. consideration less allowable deductions and explain
what these are.
Step 3
Consider reliefs e.g. business asset disposal/roll-over/hold-over relief etc. Are they
applicable? If not, why not?
Step 4
Deduct any allowable losses (i.e. those in the current Tax Year and unused losses from
previous years).
Step 5
Cumulate with other gains in that Tax Year (if any).
Step 6
Deduct the annual exempt amount from cumulated gains.
Step 7
You can now calculate the tax due, having checked whether the tax payer is a basic or
higher rate tax payer for income tax purposes.
Who pays it?
- Most UK taxpayers are liable but not companies.
- CGT is paid on the increase in value of the asset.
Chargeable disposal
- Sale of asset, giving it away gift, exchange or lost/destroyed.
Exempt disposals
- On death, transfer of estate to deceased heirs.
- Between spouses and civil partners.
- Gifts to charities and political parties.
Summary - Steps of a CGT calculation
Step 1
First identify whether you have a chargeable asset which is the subject of a chargeable
disposal by a chargeable person in the current Tax Year.
Step 2
Then explain/calculate the gain e.g. consideration less allowable deductions and explain
what these are.
Step 3
Consider reliefs e.g. business asset disposal/roll-over/hold-over relief etc. Are they
applicable? If not, why not?
Step 4
Deduct any allowable losses (i.e. those in the current Tax Year and unused losses from
previous years).
Step 5
Cumulate with other gains in that Tax Year (if any).
Step 6
Deduct the annual exempt amount from cumulated gains.
Step 7
You can now calculate the tax due, having checked whether the tax payer is a basic or
higher rate tax payer for income tax purposes.
Who pays it?
- Most UK taxpayers are liable but not companies.
- CGT is paid on the increase in value of the asset.
Chargeable disposal
- Sale of asset, giving it away gift, exchange or lost/destroyed.
Exempt disposals
- On death, transfer of estate to deceased heirs.
- Between spouses and civil partners.
- Gifts to charities and political parties.
