Formula:
Understanding the UK Capital Gains Tax (CGT) calculation can be complex. Our calculator simplifies the process based on the 2024/2025 tax year rules.
Key Formula Steps:
- Net Gain = (Sale Price - Allowable Sale Costs) - (Purchase Price + Allowable Purchase Costs + Capital Improvement Costs)
- Taxable Gain = Net Gain - Annual Exempt Amount (£3,000 for 2024/25) (only if Net Gain is greater than the AEA)
- CGT Payable = (Taxable Gain at Basic Rate * Basic CGT Rate) + (Taxable Gain at Higher Rate * Higher CGT Rate)
Variable Explanations:
- Sale Price: The total amount for which you sold the asset.
- Allowable Sale Costs: Expenses directly related to selling the asset (e.g., estate agent fees, solicitor fees).
- Purchase Price: The original amount you paid for the asset.
- Allowable Purchase Costs: Expenses directly related to buying the asset (e.g., stamp duty, legal fees).
- Capital Improvement Costs: Money spent on enhancing the asset's value, not just maintenance (e.g., adding an extension).
- Other Taxable Income: Your total taxable income for the tax year, excluding any capital gains. This determines which CGT rate applies to your gain.
- Asset Type: Specifies whether the asset is residential property or another type (e.g., shares, antiques), as different CGT rates apply.
- Annual Exempt Amount (AEA): The tax-free allowance for capital gains each tax year. For 2024/25, it is £3,000.
- CGT Rates: Depend on your total taxable income and asset type. For 2024/25: Residential Property (18% basic rate, 24% higher rate); Other Assets (10% basic rate, 20% higher rate).