Capital Gains Tax

Capital Gains Tax (CGT) changed on 6^th April 2008. You can use this simple calculator to see how the changes have affected you. The calculator does not allow you to offset losses.

This is a simple tool to help you understand the change in tax that you might pay. It is designed only for investments made on or after 31^st March 1982 and provides you with an estimate of the gain and an estimate of the tax you might pay, depending upon your tax status.

Capital Gains Tax calculations can be very straightforward or very complex, depending upon the situation. This calculator simplifies the position and so doesn't account for some of the reliefs and offsets that might be available to you.

The CGT calculator does not include 'Entrepreneurs Relief'. The calculator should not therefore be used for CGT calculations involving sales of small businesses or unquoted companies. Entrepreneurs relief may reduce the tax rate to 10% on the first £1million of taxable gain with 18% tax payable on the residual gain. The new 18% rate applies to all other business assets and all non-business assets. Further detail on Entrepreneurs Relief is available on the Help Notes under the CGT Calculator.

This calculator is provided in the spirit of education. If you have any doubts seek specialist tax advice. We have also produced a FREE Guide to Saving Tax that you can download here.

Top Capital Gains Tax Saving Tips

• Where possible, and practical, realise gains up to your annual exemption every year (£9,600 for tax year 2008/9)
• If you are married (or in a civil partnership), make use of both of your CGT annual exemptions. Investments can be transferred between you and your spouse at a nil gain/nil loss position and then can be cashed in.
• Use the proceeds of encashments to fund your ISA allowance, known as Bed and ISA. Investments within an ISA pay no CGT.
• Alternatively, you can use the proceeds to fund a pension, known as Bed and SIPP. Almost everyone up to age 75 can contribute to a SIPP and receive tax relief at the basic rate, even if you are not a tax payer. Higher rate taxpayers can also reclaim up to a further 20% through their tax return. SIPPs pay no CGT on the growth in the fund.
• Offset any losses. CGT losses can be carried forward indefinitely but you need to register them.
• Review your insurance investment bonds. Profits are generally taxed as income and under the new regime this may be more punitive compared to unit trusts and shares from a tax perspective. You may be better off investing elsewhere. If you cash in your investment bond, be careful of tax, charges or market value adjusters.
• Some more sophisticated investments are CGT free. For example Enterprise Investment Schemes (EIS) allow you to defer capital gains. In addition, you also receive up to 20% income tax relief on the amount that you invest (maximum investment £500,000). EIS schemes are for those who can afford to take higher than average risks and invest upwards of £50,000 into the scheme. After two years, holdings in EIS may be IHT free too, but they carry greater risk than some other investments.
• Invest in a Venture Capital Trust (VCT). Up to 30% tax relief is available on the initial investment (maximum investment £200,000) and there is no CGT or income tax to pay on the profits. VCTs are higher risk investments, designed for sophisticated investors.
• Grandparents can make tax-efficient investments using a simple bare trust. This process means that the proceeds pass to the grandchildren when they reach age 18 and any tax liability falls on them. Typically the amount of the gain would fall within the grandchildren's CGT annual exemptions and therefore the proceeds would be free of tax.