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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Rates of tax: introduction

TCGA92/S4

This guidance explains the rates of tax applicable to individuals.

For rates applicable to

  • companies, see CG40201
  • trusts and settlors, see CG35200+
  • personal representatives, see CG30610.

Rates of Capital Gains Tax have varied since the tax was introduced in 1965. This page details the rates that have applied since 2000-2001.

6 April 2000 to 5 April 2008

Chargeable gains are taxed as if they are the top slice of income.

The starting rate of 10% could be used against chargeable gains from 2000-01 onwards.

6 April 2008 to 22 June 2010

For chargeable gains accruing to individuals from 6 April 2008 to 22 June 2010 the rate of Capital Gains Tax was 18 per cent. There was no link with the individual’s personal rates of tax. So if an individual had net chargeable gains of £20,000 the charge was at 18 per cent on those gains after deducting the annual exempt amount.

From 23 June 2010

The rates at which gains are taxed changed for chargeable gains that accrue on or after 23 June 2010. From that date gains are taxed at 28%, or at 18% to the extent that an individual has any unused part of the basic rate band (see below for additional changes for 2016-17 onwards). There is a simple example at CG21205 to show how to calculate the rate of tax for 2010-11.

Gains that accrue on or after 23 June 2010 and that qualify for Entrepreneurs’ relief are taxed at 10%. There is detailed guidance on Entrepreneurs’ Relief at CG63950+. Where an individual has gains that qualify for Entrepreneurs’ Relief those gains up to the basic rate band in priority to other gains (TCGA92/S4(6)). This is illustrated by the example at CG21210.

The amount of gain that is charged to Capital Gains Tax at 18% may be modified in certain special cases that affect the amount of income that is treated as using up an individual’s basic rate band, see CG21230. An individual’s basic rate band may be extended to permit higher relief on certain payments and this may affect the amount of gain that is taxed at 18%,  see CG21220.

2010-11 is the only year in which the rates of Capital Gains Tax have been changed part of the way through a tax year. Gains that accrue in 2010-11 up to and including 22 June 2010 are taxed at 18%. There are transitional provisions that determine when in 2010-11 a gain is to be deemed to accrue in cases where the relevant legislation does not provide for a precise time of accrual. These transitional provisions are described at CG21240. In other cases the time of accrual depends on the facts and no transitional rule is needed, just as no transitional rule is needed when rates change from one year to the next.

Additional changes from 6 April 2016

FA2016 introduced a reduction in the Capital Gains Tax Rates for most assets. The 18% rate was reduced to 10% and the 28% rate was reduced to 20%. However the 18% and 28% rates were retained for ‘upper rate gains’ (TCGA92/S4(2A)).

Upper rate gains are:

           Residential property gains (TCGA92/S4BB and Sch B1)

           Non-resident CGT gains ses CG73700+

           Carried interest (TCGA92/S103KA)

 

General points

Unused personal allowances and other unused Income Tax reliefs, for example capital allowances and allowable charges, cannot be set against chargeable gains. The only exceptions to this rule are listed below.

The following Income Tax reliefs can be taken into account as deductions from chargeable gains

  • relief for trading losses (ITA07/S64 applied to Capital Gains Tax by TCGA92/S261B), see BIM75420 onwards
  • relief for post-cessation expenditure (TCGA92/S261D), see CG15802
  • relief for certain post-employment expenses (TCGA92/S263ZA (3)), see CG15803.