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Large CG with small income

01/02/2018 22:02:34
Hi

I wonder if someone could check my understanding of CGT where there's a lot of CG and no income besides bank interest.
Specifically how large the 10% CGT band is when you have a tiny income (only bank interest) that is below the personal allowance.

Read the gov.uk site but would feel more comfortable double checking.

How much CGT is due on £211,300 Capital Gain that is not from property if your only income was £3000 of bank interest? I understand the CG tax free allowance is £11,300 thus meaning there is £200K of taxable gain here.

Is the tax 10% on the first £33,500 of £200,000 or more than this as the tax free personal allowance is hardly used? Or less than £33,500 as the £3,000 bank interest reduces it despite being under the personal allowance and not taxable - and the personal savings allowance is £1000?

I've read "The rate of Capital Gains Tax is 10%, where the total of taxable gains and taxable income is less than £33,500. Any excess gains are taxed at 20%." but I'm having trouble translating that to my situation with just a small amount of bank interest as income. I'm not sure how the £11,500 personal allowance is applied here if at all.

Some definitive guidance would be helpful - note that this would be for the upcoming 17/18 return.
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Re:Large CG with small income

02/02/2018 14:35:19
Hi


Thank you for your post.

We have referred it to one of our technicians so please bear with us.

Thank you
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Re:Large CG with small income

05/02/2018 10:28:41
Hi

Capital Gains has it’s own exemption amount, which is £11,300 for the 17/18 tax year (as you mentioned). This acts in the similar way as your personal allowances for Income Tax. Although you are not utilising your personal allowances, this is now offset at all against your capital gain.

The only relationship between Income Tax and Capital Gains tax is that the amount of taxable income you have, will then determine the rate at which you pay your Capital Gains Tax. As you are not using any of the basic rate band at all, of the 2K which is taxable you will pay 10% on £33,500 and then 20% on the remainder.