Do income tax & CGT tax thresholds apply separately?

[SciFi]

Hi

I understand that income tax and Capital Gains Tax are separate taxes (HMRC website tells me so). I’m wanting to be certain how the tax free thresholds work

If I take an income of £12,500 (from my SIPP as taxable income drawdown) but also sell some shares making a £2000 gain, do I pay any tax?

Basically, is it
Scenario 1: Personal tax allowance of £12,500, CGT allowance of £6000 – Both income & CGT gain are below their respective thresholds so no tax to pay
Or
Scenario 2: CGT gain is below CGT threshold, but combined income is £14,500 and the personal tax allowance applies to that figure as a whole. So I need to pay some tax.

Thanks

Pete

[Arborbridge]

Hi

I understand that income tax and Capital Gains Tax are separate taxes (HMRC website tells me so). I’m wanting to be certain how the tax free thresholds work

If I take an income of £12,500 (from my SIPP as taxable income drawdown) but also sell some shares making a £2000 gain, do I pay any tax?

Basically, is it
Scenario 1: Personal tax allowance of £12,500, CGT allowance of £6000 – Both income & CGT gain are below their respective thresholds so no tax to pay
Or
Scenario 2: CGT gain is below CGT threshold, but combined income is £14,500 and the personal tax allowance applies to that figure as a whole. So I need to pay some tax.

Thanks

Pete

If the shares making the £2000 gain are not in the SIPP they are covered by the CGT allowance. If the are in the SIPP then there is no CGT, but there will be an income tax consideration when you withdrawn the cash from those shares from the SIPP.

Arb.

[mc2fool]

Hi

I understand that income tax and Capital Gains Tax are separate taxes (HMRC website tells me so). I’m wanting to be certain how the tax free thresholds work

If I take an income of £12,500 (from my SIPP as taxable income drawdown) but also sell some shares making a £2000 gain, do I pay any tax?

Basically, is it
Scenario 1: Personal tax allowance of £12,500, CGT allowance of £6000 – Both income & CGT gain are below their respective thresholds so no tax to pay
Or
Scenario 2: CGT gain is below CGT threshold, but combined income is £14,500 and the personal tax allowance applies to that figure as a whole. So I need to pay some tax.

Thanks

Pete

Scenario 1.

[londoninvestor]

Scenario 1: Personal tax allowance of £12,500, CGT allowance of £6000 – Both income & CGT gain are below their respective thresholds so no tax to pay
Or
Scenario 2: CGT gain is below CGT threshold, but combined income is £14,500 and the personal tax allowance applies to that figure as a whole. So I need to pay some tax.

The tax-free thresholds for income tax and CGT are completely separate (so it's your Scenario 1).

The tax bands are not entirely separate. Specifically, if your gains exceed the CGT threshold, the rate of CGT that you pay depends on whether your income and gains combined exceed the higher-rate income tax threshold. See: https://www.gov.uk/capital-gains-tax/rates

[SciFi]

Thanks for responses.

I should have pointed out the £2000 share gain is completely separate from my SIPP

I think it's that information on the tax bands are not being entirely separate that confused me. I must have heard that somewhere and conflated different issues. Makes sense to me now.

Cheers

Pete

[Lootman]

As others have noted they are all separate and so you can double and treble dip.

As well as no tax if your base income is below the personal allowance, you can also have up to 6K in cap gains (this year), up to 1K in dividends. and up to 6K in interest income. And still pay no tax.

That could change tomorrow as well as changing a bit next month anyway.