Capital Gains Tax rates and annual tax-free allowances
Each tax year nearly everyone who is liable to Capital Gains Tax gets an annual tax-free allowance – known as the ‘Annual Exempt Amount’. You only pay Capital Gains Tax if your overall gains for the tax year (after deducting any losses and applying any reliefs) are above this amount.
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Capital Gains Tax rates for 2007-08 and earlier
Before 6 April 2008, ‘personal representatives’ or executors dealing with the estate of a deceased person and most trustees paid Capital Gains Tax at a single rate of 40 per cent.
Everyone else paid Capital Gains Tax at a variable rate (eg 10 per cent, 20 per cent and 40 per cent) based on the amount of their income and gains.
The annual tax-free allowance (known as the Annual Exempt Amount) allows you to make a certain amount of gains each year before you have to pay tax.
Nearly everyone who is liable to Capital Gains Tax gets this tax-free allowance.
There's one Annual Exempt Amount for:
- most individuals who live in the UK
- executors or personal representatives of a deceased person’s estate
- trustees for disabled people
Most other trustees get a lower Annual Exempt Amount.
|Individuals, personal representatives
and trustees for disabled people
Executors and personal representatives
If you're acting as an executor or personal representative for a deceased person's estate, you may get the full Annual Exempt Amount during the ‘administration period’. The administration period is usually the time it takes to settle the deceased person’s affairs and get a grant of probate (or confirmation in Scotland).
You're entitled to the Annual Exempt Amount for the tax year in which the death occurred and the following two tax years. After that there's no tax-free allowance against gains made during the administration period.
Trustees for disabled people
If you're acting as a trustee for a disabled person you use the higher Annual Exempt Amount above - and not the rate for 'other trustees'.
A disabled person in this context is a person who has mental health problems or receives the middle or higher rate of Attendance Allowance or Disability Living Allowance.
People who are 'non-domiciled' in the UK
You won't get the Annual Exempt Amount if you're 'non-domiciled' in the UK and you've claimed the 'remittance basis' of taxation on your foreign income and gains.
You may be 'non-domiciled' in the UK, for example, if you were born in another country and intend to return there.
You may have claimed the 'remittance basis' if you have income and gains from abroad and have decided that it's beneficial to be taxed on the foreign income and gains that you bring into the UK, rather than on all income and gains that arise.
Issues of domicile and tax on foreign gains are complicated. A lot depends on the facts of each case. You can find out more by following the link below. Or speak to your Tax Office about your specific circumstances.