When you sell your property you must pay Capital Gains Tax on any profits that you make over and above your Annual Exempt Amount. This is currently £11,850. The rate at which you pay tax will depend on whether you are a basic or higher rate taxpayer and how much profit you have made.
Basic Rate Taxpayers
You will pay either 18% or 28% tax on your gains. How much you will pay depends on the size of your gain and your taxable income.
- Work out how much taxable income you have earned. This is your income less your personal allowance and any other allowances that you are entitled to.
- Then work out your taxable gains.
- Deduct your Annual Exempt Amount from these.
- Add this amount to your taxable income.
- If the final amount is within the basic Income Tax band for the tax year, you will pay 18% Capital Gains Tax. You’ll pay 28% on any amount above this.