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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Capital Gains Tax: rates of tax

There are four categories of person chargeable to Capital Gains Tax:

  • individuals
  • personal representatives
  • trustees
  • companies if they are not within the charge to Corporation Tax.

Individuals, personal representatives and trustees

TCGA92/S4 and TCGA92/S4A, TCGA92/S4B - since 23 June 2010

Where chargeable gains accrue to an individual on or after 23 June 2010, those net gains accruing in a year of assessment, after taking account of losses and the annual exempt amount (CG18000c), are charged to Capital Gains Tax at 10 per cent if the gains qualify for entrepreneurs’ relief (CG63950+). Other gains are charged at 28 per cent or at 18 per cent to the extent that the basic rate limit is not utilised by the individual’s income and by gains qualifying for entrepreneurs’ relief. Unused Income Tax reliefs and allowances cannot be set against the net gains.

For 2010 - 11 and subsequent years gains accruing to a person in a tax year may be chargeable to Capital Gains Tax at different rates. Thus the tax effect of losses and the annual exempt amount set off against those gains can vary. CG18000 and CG21600+ explain that, subject to any rules which limit the gains from which losses may be deducted, losses and the annual exempt amount may be set against gains in the way that is most beneficial to the individual.

A list of rates can be found on the HMRC internet at http://www.hmrc.gov.uk/rates/cgt.htm#2

Different rates of tax apply to the different categories of person. More detail is given in the appropriate section of the guidance as follows:

  • individuals, see CG21000+
  • personal representatives, see CG30610
  • trustees, see CG35200+.

For 2016 - 17 and later years the main rates at which gains were charged reduced by 8%. The main rates reduced to 10% and 20% depending on the amount of a person’s basic rate band available. However gains that are treated as ‘upper rate gains’ remain chargeable at the 18% and 28% rates.

TCGA92/S4(2A) defines upper rate gains as:

  • residential property gains (see section4BB)
  • NRCGT gains (see section 14D) and
  • gains accruing under section 103KA(2) or (3) (carried interest)

 

TCGA92/S4 as amended by FA08/S8 - 6 April 2008 to 22 June 2010

Where chargeable gains accrue to an individual in the period from 6 April 2008 to 22 June 2010, those net gains accruing in a year of assessment, after taking account of losses and the annual exempt amount, are charged to Capital Gains Tax at 18 per cent. There is no link to the individual’s income.

TCGA92/S4 and TCGA92/S6 - up to 5 April 2008

Where chargeable gains accrue to an individual up to 5 April 2008, the chargeable amount for a year of assessment, after taking account of losses and the annual exempt amount, is in effect added to income for tax purposes, and charged to tax at the same rates as if it was the top slice of income. Unused Income Tax reliefs and allowances cannot be set against these net gains.

Companies

A company’s chargeable gains less allowable losses are normally included in its total profits for an accounting period and charged to Corporation Tax.

  • Companies chargeable to Corporation Tax, see CG40350
  • Companies outside the charge to Corporation Tax, see CG40320.