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 CGT formula:

Where:

• \( Gain \) — The profit made from selling the asset (GBP)
• \( Rate \) — The applicable tax rate (%)
• \( Reliefs \) — Any tax reliefs or allowances (GBP)

Explanation: The equation calculates tax by applying the rate to the gain and then subtracting any eligible reliefs or allowances.

3. Importance of CGT Calculation

Details: Accurate CGT estimation is crucial for financial planning, tax reporting, and ensuring compliance with tax regulations.

4. Using the Calculator

Tips: Enter the gain in GBP, the applicable tax rate as a percentage, and any reliefs in GBP. All values must be valid (gain > 0, rate between 0-100).

5. Frequently Asked Questions (FAQ)

Q1: What counts as a capital gain?
A: You pay Capital Gains Tax on the profit when you sell most personal possessions worth £6,000 or more, property that's not your main home, business assets, or shares.

Q2: Are there tax-free allowances?
A: Yes, there's an annual tax-free allowance (currently £12,300) which you can use as relief against your gains.

Q3: What are the current CGT rates?
A: For individuals, rates are typically 10% for basic rate taxpayers and 20% for higher rate taxpayers (18% and 28% for residential property).

Q4: When do I need to pay CGT?
A: CGT is usually reported and paid through your Self Assessment tax return by 31 January following the tax year in which you made the gain.

Q5: Can I reduce my CGT liability?
A: Yes, through reliefs like the annual exempt amount, losses from previous years, or specific reliefs like Entrepreneurs' Relief.