7. Tax rates for gains before 6 April 2016

HM Revenue and Customs (HMRC) calculates the Capital Gains Tax you owe based on what you report in your tax return. Non-residents fill in an online form instead.

These are the rates for the 2015 to 2016 tax year. There are different rates for gains made from 6 April 2016.

If you pay higher rate Income Tax

You’ll pay 28% tax on your gains if you’re a higher or additional rate taxpayer.

If you pay basic rate Income Tax

You’ll either pay 18% or 28% tax on your gains if you’re a basic rate taxpayer. How much you pay depends on the size of your gain and taxable income.

  1. Work out how much taxable income you have - this is your income minus your Personal Allowance and any other Income Tax reliefs you’re entitled to.

  2. Work out your total taxable gains.

  3. Deduct your tax-free allowance from your total taxable gains.

  4. Add this amount to your taxable income.

  5. If this amount is within the basic Income Tax band for the 2015 to 2016 tax year, you’ll pay 18% Capital Gains Tax. You’ll pay 28% on any amount above this.

Example

Your taxable income (your income minus your Personal Allowance and any Income Tax reliefs) is £20,000 and your taxable gains are £12,100.

First, deduct the tax-free allowance of £11,100 from your taxable gain. This leaves £1,000 to pay tax on.

Add this to your taxable income. Because the combined amount of £21,000 is less than £31,785 (the basic rate band for the 2015 to 2016 tax year), you pay Capital Gains Tax at 18%.

This means you’ll pay £180 in Capital Gains Tax.

If you’re a trustee or business

Trustees or personal representatives of someone who’s died pay 28% Capital Gains Tax from the trust or estate.

You’ll pay 10% if you’re a sole trader or partnership and your gains qualify for Entrepreneurs’ Relief.