Capital Gains Tax
What is Capital Gains Tax?
Capital Gains Tax is a tax on profit. If you buy shares for £5,000 and sell them for £8,000, the £3,000 profit is your “gain”. You may owe tax on that gain.
How much is the Capital Gains Tax allowance?
You can make £3,000 in gains per tax year before you pay anything. This is called the annual exempt amount. It resets every April.
How much Capital Gains Tax do you pay?
For investments, the rate is 18% for basic rate taxpayers and 24% for higher rate taxpayers. The rate depends on your total income plus gains for the year.
Do you pay Capital Gains Tax in an ISA?
No. Investments inside an ISA or SIPP are exempt. You pay no Capital Gains Tax on profits made within these accounts.
In a GIA, you can use your £3,000 annual allowance. Married couples can transfer assets between them to use both allowances.
Key points about Capital Gains Tax
- Tax on profits when you sell, not on what you put in
- £3,000 annual allowance. Gains below this are tax-free
- ISAs and SIPPs are exempt. No Capital Gains Tax inside these accounts
More information
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