The Lemon Fool

Bit premature, but this tax year (23/24) I'm going to be liable for CGT for the first time
(bit of a miscalculation - I thought the zero rate band was £10k... Should have checked first)
Does the CGT part interact with income tax calculations at all , or is it completely stand-alone?
I'm assuming capital gains don't count towards total income - but don't know
A vague worry it might push me into the HRT bracket, and reduce savings allowance to £500

CGT wont alter your Income Tax rates at all. But your income levels can influence how much CGT you pay. https://www.gov.uk/capital-gains-tax/rates

Edit - obviously the 6k exempt amount will be wrong shortly.

https://www.gov.uk/capital-gains-tax/rates
Looking at the example given, it appears that the capital gains above the threshold determine are added to income to determine tax rate
So , does this mean if I had the following income
Earnings £47k
Interest £1k
Divis £2k
and capital gains of (say) £9k
Add £3k (£9k-£6k) to £50k income
£53k total -above £50,270 HRT threshold
So -the capital gains would be taxed at 20% ?
Would it also reduce my personal savings allowance to £500 from £1000? Would the £500 interest be considered as sitting in the 40% HRT band?

AleisterCrowley wrote:https://www.gov.uk/capital-gains-tax/rates
Looking at the example given, it appears that the capital gains above the threshold determine are added to income to determine tax rate
So , does this mean if I had the following income
Earnings £47k
Interest £1k
Divis £2k
and capital gains of (say) £9k
Add £3k (£9k-£6k) to £50k income
£53k total -above £50,270 HRT threshold
So -the capital gains would be taxed at 20% ?
Would it also reduce my personal savings allowance to £500 from £1000? Would the £500 interest be considered as sitting in the 40% HRT band?

As genou stated, the fact that your gains push you above the HRT threshold does not affect how your income is taxed. It simply means that the portion of gains over that threshold is taxed at 20% rather than 10%.

£53,000 minus £50,270 is £2,730 and it is that amount of your gains that is taxed at 20% and not 10%. So CGT due on that portion is £546.

The first £270 of your gain is taxed at 10%, so £27 in CGT.

Total CGT due is therefore £573 (546 plus 27)

So it wouldn't mean my savings allowance is reduced then ?

AleisterCrowley wrote:So it wouldn't mean my savings allowance is reduced then ?

CGT will not affect your IT rates or allowances.

AleisterCrowley wrote:So it wouldn't mean my savings allowance is reduced then ?

Correct. In fact even if your income is below the personal allowance, and so you qualify for an extra £5,000 allowance on interest, you still get that full allowance even if you have £60,000 in realised capital gains that year.

Thanks both - clearer now!
I wish there were some online calculator available so I could plug some numbers in.
There probably is one somewhere, but I haven't found it. Just something that replicates the calculations produced by HMRC when a tax return is completed online. Obviously by the time HMRC do the sums it's too late to do anything about the relevant tax year

AleisterCrowley wrote:Thanks both - clearer now!
I wish there were some online calculator available so I could plug some numbers in.
There probably is one somewhere, but I haven't found it. Just something that replicates the calculations produced by HMRC when a tax return is completed online. Obviously by the time HMRC do the sums it's too late to do anything about the relevant tax year

You can use the HMRC online, and not submit. Or https://sa2000.co.uk/ have an excel based tool that's free unless you want to use it to submit the return. They'd both be 22/23 currently, and the only change for next year would be the CGT exempt amount.

Edit: and the dividend allowance goes down.

AleisterCrowley wrote:Thanks both - clearer now!
I wish there were some online calculator available so I could plug some numbers in.
There probably is one somewhere, but I haven't found it. Just something that replicates the calculations produced by HMRC when a tax return is completed online. Obviously by the time HMRC do the sums it's too late to do anything about the relevant tax year

A Lemon posted a link to a spreadsheet here....https://www.sa2000.co.uk/

Step 1 : I filled it in for my wife's tax return and arrived at the same answer as HMRC for 2022-23 tax year. There was no capital gains last year.

Step 2 : I believe we will have a CGT liability for this tax year (property sale)

Step 2a : I want to calculate the total tax due (income + capital gain)
Step 2b : I plan to sell loss making shares from Mrs Mrs account to partially offset the CGT (and rebuy the shares in my account).



It's not the best laid out software ..it's in Excel. It will be updated for the next tax year . One has to pay a small sum of money if one wants to use the spreadsheet to link to HMRC and submit a tax return. I plan to use it to play around to see how I can best minimise Mrs M's tax.


Edit : I see the same link provided by Genou. I personally didn't find the software nice to use (?). I noted you have Excel based on a previous post regarding removal of AV software .

Yes, I spent most of my working life using Excel for pretty much everything, and created some mammoth spreadsheets that only I could understand (intentionally?) so I'm used to the beast

AleisterCrowley wrote:Thanks both - clearer now!
I wish there were some online calculator available so I could plug some numbers in.
There probably is one somewhere, but I haven't found it. Just something that replicates the calculations produced by HMRC when a tax return is completed online. Obviously by the time HMRC do the sums it's too late to do anything about the relevant tax year

There's a very good online calculator, and it's free too. It's called self assessment.

No need to faff with any third party spreadsheets or whatever, just go to the horse's mouth and do the self assessment all the way to the "View your calculation" stage, which will give you the breakdown of your tax bill. Just don't go to the next step to submit it.

After viewing it for your first set of fictitious/experimental/guesswork numbers you can go back and change the numbers for any section you want willy nilly and "View your calculation" again to see how your tax bill changes. Repeat as much as you like, just don't submit it until you've put it your real final numbers....

Ah, but.... if I want to do some 'what if' scenarios for 23/24, surely if I use the HMRC calculations they will apply the 22/23 rules and allowances until 6 April 24, after which it's too late to do anything

AleisterCrowley wrote:Ah, but.... if I want to do some 'what if' scenarios for 23/24, surely if I use the HMRC calculations they will apply the 22/23 rules and allowances until 6 April 24, after which it's too late to do anything

True, but you can always dicker the numbers to take that into account. I think the only thing that's changing (relevant to this thread) is the CGT annual exempt amount.

However, having said that, with the deadline in 8 days time you should have got your 22/23 self assessment in already, so you'd have to modify what's already there (but again, don't submit!).

But what "what ifs" and "do anything" are you talking about? You're OP seems to say that your situation is already a done deal and you were just trying to figure out the tax impact of it.....no?

Stating obvious. but can realise losses in this tax year, use losses brought forward (think can go back 4 years if not declared to hmrc before) to offset gains.

My investments have gone sideways for 2-3 years, so you're doing something right!!

mc2fool wrote:

AleisterCrowley wrote:Ah, but.... if I want to do some 'what if' scenarios for 23/24, surely if I use the HMRC calculations they will apply the 22/23 rules and allowances until 6 April 24, after which it's too late to do anything

...

But what "what ifs" and "do anything" are you talking about? You're OP seems to say that your situation is already a done deal and you were just trying to figure out the tax impact of it.....no?

I'm trying to decide;
(a) how much to take out of my DC pension as taxable income (so not a done deal like a salary - I'm temporarily redundant!)
(b) which, if any, losses to crystallise and offset against capital gains

AleisterCrowley wrote:

mc2fool wrote:...

But what "what ifs" and "do anything" are you talking about? You're OP seems to say that your situation is already a done deal and you were just trying to figure out the tax impact of it.....no?

I'm trying to decide;
(a) how much to take out of my DC pension as taxable income (so not a done deal like a salary - I'm temporarily redundant!)
(b) which, if any, losses to crystallise and offset against capital gains

Ok, well those sound like they can both be done on the back of an envelope. Unless there are any particular twists about your situation they don't sound like they need much in the way of software, if at all indeed. Maybe just a small bit of Excel if you want to diddle the numbers a lot.

Yes, but I needed to clarify the point re personal savings allowance etc, as some of the online resources are a bit ambiguous

AleisterCrowley wrote:Yes, but I needed to clarify the point re personal savings allowance etc, as some of the online resources are a bit ambiguous

Again, unless you are higher rate from income, your PSA is 1k. CG does not come in to it.

If your earned income is at or below your PA ( 12570 ) you can generate another 5k in interest ( but not dividends ) tax free. You get 1k in dividend income tax free ( going down to 500 next year )

Each £1 of income above the PA /dividend allowance reduces that £5k tax free interest allowance pound for pound.

AleisterCrowley wrote:Yes, but I needed to clarify the point re personal savings allowance etc, as some of the online resources are a bit ambiguous

Ok, so then I suggest that you (a) use the 22/23 online self assessment to experiment and check out if there is any effect on the PSA, and (b) pore through the autumn statement to see if there's any changes in that respect.

Or do (b) then (a).