CGT

[daveh]

When calculating CGT:

I'm a basic rate tax payer so some of the gain will be taxed at 10% and some will be taxed at 20%. To calculate the amount in the latter band do I need to include interest on income that is within the 0% band (ie less than £1000) and dividend income within the £2000 % band)?


eg if my taxable salary is £40000 and I have interest income of £300 and dividend income of £1700 do I pay capital gains tax at 10% on £6350 of the gain and 20% on the rest OR 10% on £4350 and 20% on the rest?

[PinkDalek]

When calculating CGT:

I'm a basic rate tax payer so some of the gain will be taxed at 10% and some will be taxed at 20%. To calculate the amount in the latter band do I need to include interest on income that is within the 0% band (ie less than £1000) and dividend income within the £2000 % band)?

You could start here at the section entitled If you pay basic rate Income Tax https://www.gov.uk/capital-gains-tax/rates.

That includes:

Work out how much taxable income you have - this is your income minus your Personal Allowance and any other Income Tax reliefs you’re entitled to.


taxable income is explained here:

https://www.gov.uk/income-tax

It includes (my bold):

You pay tax on things like: ... interest on savings over your savings allowance

You do not pay tax on things like: ... dividends from company shares under your dividends allowance

eg if my taxable salary is £40000 and I have interest income of £300 and dividend income of £1700 do I pay capital gains tax at 10% on £6350 of the gain and 20% on the rest OR 10% on £4350 and 20% on the rest?

Assuming you are looking at 2019-20, £40,000 - personal allowance £12,500 = £27,500. The Basic rate for England & Northern Ireland is up to £37,500. Thus leaving £10,000 available. I don't therefore follow your ***£6,350 but, for these purposes, I believe you ignore the £300 and the £1,700.

In case it is not clear, you also have the CGT annual exempt amount of £12,000 to factor in.

Incidentally, those CGT rates don't apply on chargeable residential property gains as per the first link above.

*** It is probably obvious but not to me!

[daveh]

Its 18 -19 so I need to do it by December and the allowance is £11700. I actually got the Gov.uk page to calculate the tax, but when it asked for income I put in my taxable income form my P60 and it worked out my tax due. However I suddenly thought perhaps I should have added in my dividend and interest income even though they were not taxed.

To complicate matters I live in Scotland, but I understand that as Capital gains tax is reserved to Westminster the Scottish tax bands don't apply for CGT.


I failed (I think - I got a HTTP 404 error when submitting my calculations) to get the website to work and the advisor on the phone said to send them a letter with my calculations. (I could add to the letter that I have dividend and interest income that I've not included and leave it up to them to say if I've worked it out correctly.

[PinkDalek]

Its 18 -19 so I need to do it by December and the allowance is £11700. ... To complicate matters I live in Scotland

Helpful info to have included in your OP but why do you say December?

If you are doing Online tax returns the deadline is Midnight 31 January 2020 from https://www.gov.uk/self-assessment-tax-returns/deadlines. Perhaps you are thinking of the item further down commencing When the deadline is different - Submit your online return by 30 December if you want HMRC to automatically collect tax you owe from your wages and pension.

I still don't understand your £6,350 unless that is your chargeable gain (after the CGT annual exempt amount).

However I suddenly thought perhaps I should have added in my dividend and interest income even though they were not taxed.

Well, yes, if you are completing an online tax return then you should have included those items. If you get back online, from https://www.gov.uk/self-assessment-tax-returns/corrections

If you need to change your return

You can make a change to your tax return after you’ve filed it, for example because you made a mistake. You’ll need to make your changes by:
- 31 January 2021 for the 2018 to 2019 tax year

[daveh]

Its 18 -19 so I need to do it by December and the allowance is £11700. ... To complicate matters I live in Scotland

Helpful info to have included in your OP but why do you say December?

If you are doing Online tax returns the deadline is Midnight 31 January 2020 from https://www.gov.uk/self-assessment-tax-returns/deadlines. Perhaps you are thinking of the item further down commencing When the deadline is different - Submit your online return by 30 December if you want HMRC to automatically collect tax you owe from your wages and pension.

I still don't understand your £6,350 unless that is your chargeable gain (after the CGT annual exempt amount).

However I suddenly thought perhaps I should have added in my dividend and interest income even though they were not taxed.

Well, yes, if you are completing an online tax return then you should have included those items. If you get back online, from https://www.gov.uk/self-assessment-tax-returns/corrections

If you need to change your return

You can make a change to your tax return after you’ve filed it, for example because you made a mistake. You’ll need to make your changes by:
- 31 January 2021 for the 2018 to 2019 tax year

I'm not doing an online tax form, just extra tax for capital gains - I'm not registered for self assessment and was trying to do the capital gains via the real time capital gains pages which allows you to report capital gains without doing a full tax return*. The £6350 is the amount of the capital gain that falls within the basic rate band if my taxable salary was £40,000 and would be taxed at 10%. If I need to include dividend and interest income that reduces the amount taxed at 10% (and increases the amount taxed at 20%).


HMRC said to just send them a letter with my calculations and they would sort it, but I'm trying to make sure I've done the calculation correctly. I'll have another look through the HMRC pages and see if I can find the information there.

[PinkDalek]

I'm not doing an online tax form, just extra tax for capital gains - I'm not registered for self assessment and was trying to do the capital gains via the real time capital gains pages which allows you to report capital gains without doing a full tax return*.

Okay so that explains the 31 December deadline https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

The £6350 is the amount of the capital gain that falls within the basic rate band if my taxable salary was £40,000 and would be taxed at 10%.

Sorry but I'm being thick and am not familiar with the Scottish system, which may explain my confusion on the £6,350. Your gross salary was £40,000 and you get a personal allowance of £11,850, leaving £28,150. What calculations then take place to get to your £6,350?

If I need to include dividend and interest income that reduces the amount taxed at 10% (and increases the amount taxed at 20%).

Yes, that I understand and hope I've already answered correctly.

[Alaric]

Sorry but I'm being thick and am not familiar with the Scottish system, which may explain my confusion on the £6,350.

It would probably help if the OP started with the gross proceeds, the cost of buying the asset and asked how it would be taxed, given his other income and Scottish taxation rules applying. Is it a property that's been sold?

[daveh]

I'm not doing an online tax form, just extra tax for capital gains - I'm not registered for self assessment and was trying to do the capital gains via the real time capital gains pages which allows you to report capital gains without doing a full tax return*.

Okay so that explains the 31 December deadline https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

The £6350 is the amount of the capital gain that falls within the basic rate band if my taxable salary was £40,000 and would be taxed at 10%.

Sorry but I'm being thick and am not familiar with the Scottish system, which may explain my confusion on the £6,350. Your gross salary was £40,000 and you get a personal allowance of £11,850, leaving £28,150. What calculations then take place to get to your £6,350?

If I need to include dividend and interest income that reduces the amount taxed at 10% (and increases the amount taxed at 20%).

Yes, that I understand and hope I've already answered correctly.

I'm probably being thick. The HMRC site says:

Include your salary before tax, and anything else you pay income tax on, but not the money you made from selling the shares.

I don't pay income tax on dividend or interest income because its in the 0% bands, but you could say I pay income tax on it but at a rate of 0%.


The £6350 is the amount left in the UK (not Scotland) basic rate band £40,000 salary - £11850 tax free allowance - £34500 basic rate band leaves £6350 free in the basic rate band. Capital gains are at taxed a 10% upto the basic rate band and then 20% for the rest.


I've emailed HMRC to see waht they say, but they are not quick at replying (so far).

[PinkDalek]

Sorry but I'm being thick and am not familiar with the Scottish system, which may explain my confusion on the £6,350. Your gross salary was £40,000 and you get a personal allowance of £11,850, leaving £28,150. What calculations then take place to get to your £6,350?

... The £6350 is the amount left in the UK (not Scotland) basic rate band £40,000 salary - £11850 tax free allowance - £34500 basic rate band leaves £6350 free in the basic rate band. ...

That makes perfect sense and so obvious now you put in in writing! I was indeed being slow and had forgotten the UK basic rate band for 2018-19 was for taxable income up to £34,500.

At least I’ve learnt from this thread how the Scottish system uses the rUK bands and rates for CGT.