Before you can work out your Capital Gains Tax you'll need to know what the annual tax-free allowance is and what tax rate to use. See the page in this guide on working out Capital Gains Tax for an overview of working out a gain or loss.
The annual tax-free allowance
Each tax year nearly everyone who is liable to Capital Gains Tax gets an annual tax-free allowance - known as the 'Annual Exempt Amount'.
The Annual Exempt Amount for tax year 2008-09 is:
* £9,600 for each individual
* £4,800 for most trustees
These amounts have increased for 2009-10 - see the 'Tax-free allowances' link below for more information on this.
If your overall gains for the tax year are above the Annual Exempt Amount, you'll pay Capital Gains Tax on the excess.
If your overall gains are below the Annual Exempt Amount, you won't pay Capital Gains Tax.
Find out about Capital Gains Tax rates and annual tax-free allowances on the HM Revenue & Customs (HMRC) website - Opens in a new window.
Example - using the Annual Exempt Amount
Your overall gain in 2008-09 is £18,000.
The Annual Exempt Amount is £9,600.
You'll pay Capital Gains Tax on the excess of £8,400 (£18,000 - £9,600).
Capital Gains Tax rates
For 2008-09 and later years, Capital Gains Tax is charged at a flat rate of 18 per cent.
Different rates applied for tax years before 2008-09.
