The short version: The Capital Gains Tax allowance is how much profit you can make each year before paying any CGT. Think of it as your tax free buffer.
This allowance resets every tax year. If you don’t use it, you lose it. You can’t carry it forward.
A few things to remember
If you own an asset jointly with someone else, you can both use your allowances. That doubles the tax free amount on a joint sale.
The CGT allowance is completely separate from your Personal Allowance. Your Personal Allowance is for income like salary or self employment earnings. The CGT allowance is just for capital gains.
What if I make a loss?
If you sell something at a loss, you can use that loss to reduce gains from other sales in the same year. If your losses bring your gain below the tax free allowance, you can save the remaining losses for future years.
Thinking about selling something and want to time it right? Talk to us about planning your disposals.
