You are here: Home - Investing -

Record capital gains means £8.8bn tax bill

Written by: Emma Lunn
Brits paid £8.8bn in capital gains tax (CGT) in the tax year 2017-18, up 14 per cent from the previous year.

Figures from HMRC show that in 2017-18 chargeable gains for CGT were £57.9bn, an increase of 13 per cent on the previous year, while CGT liabilities were £8.8bn, up 14 per cent on the year before.

The number of CGT taxpayers increased by 3 per cent to 281,000 but most CGT revenues came from a relatively small number of taxpayers. Nearly two-thirds (62 per cent) of CGT came from those who made gains of £1m or more – this group generally represents around 3 per cent of CGT taxpayers each year.

The HMRC figures suggested that people paying CGT are most likely to be aged 55 to 64, followed by those aged 65 to 74.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Last year was a bumper year for investors, who saw record capital gains on their share sales. Unfortunately, when the sun shines on investors, there’s always the risk it will be blotted out by the dark cloud of a substantial capital gains tax bill.

“The silver lining to this particular cloud is that for many investors, CGT is completely avoidable. By investing through an ISA, you can be certain that however your investments grow in future, you’ll never pay a penny of capital gains tax on them. And with an ISA allowance of £20,000 this year, over time you can build a sizeable tax-free portfolio.”

Hagreaves Lansdown suggests that if you have investments outside an ISA, you can still protect much of it from tax, by using the “Bed & ISA” process to sell them and rebuy them within the ISA wrapper. The most tax-efficient way to do this is to sell your investments to make just under the CGT threshold (£12,000 this year), so there’s no tax to pay now, and none in the future.

Married couples can get double the benefit, with a £40,000 ISA allowance between them. They can also transfer assets without triggering a tax bill, so can make gains of £24,000 between them before any tax is due.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week