1. What is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax on the profit when you sell (or 'dispose of') something (an 'asset') that's increased in value. It's the gain you make that's taxed, not the amount of money you receive.

2. How Does the Calculator Work?

The calculator uses the UK CGT formula:

Where:

• \( Gain \) — Profit from the sale of the asset
• \( Allowance \) — Annual exempt amount (£6,000 for 2023-24)
• \( Rate \) — 10% (basic rate) or 20% (higher rate)

Explanation: First subtract your tax-free allowance from your gain, then apply the appropriate tax rate to the remaining amount.

3. UK CGT Rates 2023-24

Details: For 2023-24, the CGT rates are:

• 10% for basic rate taxpayers
• 20% for higher and additional rate taxpayers
• Annual exempt amount: £6,000 (reducing to £3,000 in 2024-25)

4. Using the Calculator

Tips: Enter your total capital gain, select your tax rate, and the calculator will deduct the annual exempt amount automatically. The default allowance is set to the 2023-24 value of £6,000.

5. Frequently Asked Questions (FAQ)

Q1: What counts as a capital gain?
A: Selling property (not your main home), shares, business assets, or valuable personal possessions worth £6,000 or more.

Q2: How is the tax rate determined?
A: It depends on your income tax band. Add your taxable gain to your income to determine which rate applies.

Q3: Are there any exceptions?
A: Your main home is usually exempt (Private Residence Relief), and there are special rules for entrepreneurs' relief.

Q4: When do I pay CGT?
A: CGT is reported and paid through your Self Assessment tax return by 31 January following the tax year.

Q5: Can I offset losses?
A: Yes, capital losses can be offset against gains in the same tax year or carried forward to future years.